Optimal Transmission Regulation in an Integrated Energy Market
AbstractThe capacity of the transmission network determines the extent of integration of a multinational energy market. Cross-border externalities render coordination of network maintenance and investments across countries valuable. Is it then optimal to collect powers in the hands of a single regulator? Should a common system operator manage the entire network? I show that optimal network structure depends on (i ) how the common regulator would balance the interests of the different member states; (ii ) how the gains from market integration vary across countries; (iii ) network characteristics (substitutability versus complementarity); and (iv ) the social cost of operator rent.
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Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 838.
Length: 38 pages
Date of creation: 01 Jun 2010
Date of revision:
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Multi-national Energy Market; Transmission; Supranational Regulation; System Operation; Multi-contracting;
Other versions of this item:
- Tangerås, Thomas P., 2012. "Optimal transmission regulation of an integrated energy market," Energy Economics, Elsevier, vol. 34(5), pages 1644-1655.
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-11 (All new papers)
- NEP-ENE-2010-06-11 (Energy Economics)
- NEP-REG-2010-06-11 (Regulation)
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