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Optimal Transmission Regulation in an Integrated Energy Market

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  • Tangerås, Thomas P.

    ()
    (Research Institute of Industrial Economics (IFN))

Abstract

The 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 Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 838.

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Length: 38 pages
Date of creation: 01 Jun 2010
Date of revision:
Handle: RePEc:hhs:iuiwop:0838

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Keywords: Multi-national Energy Market; Transmission; Supranational Regulation; System Operation; Multi-contracting;

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  14. Armstrong, Mark & Sappington, David E.M., 2007. "Recent Developments in the Theory of Regulation," Handbook of Industrial Organization, Elsevier.
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