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Externalities in the games over electrical power transmission networks

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  • László Á. Kóczy

    ()
    (Óbuda University)

  • Dávid Csercsik

Abstract

An electrical transmission network consists of producers, consumers and the power lines connecting them. We build an ideal (lossless) DC load ow model as a cooperative game over a graph with the producers and consumers located at the nodes, each described by a maximum supply or desired demand and the power lines represented by the edges, each with a given power transmission capacity and admittance value describing its ability to transmit electricity. Today's transmission networks are highly interconnected, but or- ganisationally partitioned into several subnetworks, the so-called bal- ancing groups with balanced production and consumption. We study the game of balancing group formation and show that the game con- tains widespread externalities that can be both negative and positive. We study the stability of the transportation network using the recur- sive core. While the game is clearly cohesive, we demonstrate that it is not necessarily superadditive. We argue that subadditivity may be a barrier to achieve full cooperation. Finally the model is extended to allow for the extension of the underlying transmission network.

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File URL: http://uni-obuda.hu/users/vecseya/RePEc/pkk/wpaper/1103.pdf
File Function: Manuscript, 2011
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Bibliographic Info

Paper provided by Óbuda University, Keleti Faculty of Business and Management in its series Working Paper Series with number 1103.

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Length: 23 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:pkk:wpaper:1103.rdf

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Related research

Keywords: Energy transmission networks; Coop- erative game theory; Partition function form games; Externalities;

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References

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  1. Kóczy, Lászlo Á., 2006. "Sequential Coalition Formation and the Core in the Presence of Externalities," Research Memorandum 047, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  2. Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer, vol. 26(3), pages 379-401.
  3. Richard Gilbert & Neuhoff, K. & Newbery, D., 2002. "Allocating Transmission to Mitigate Market Power in Electricity Networks," Cambridge Working Papers in Economics 0225, Faculty of Economics, University of Cambridge.
  4. Yihsu Chen & Benjamin Hobbs & Sven Leyffer & Todd Munson, 2006. "Leader-Follower Equilibria for Electric Power and NO x Allowances Markets," Computational Management Science, Springer, vol. 3(4), pages 307-330, September.
  5. Hobbs, Benjamin F. & Kelly, Kevin A., 1992. "Using game theory to analyze electric transmission pricing policies in the United States," European Journal of Operational Research, Elsevier, vol. 56(2), pages 154-171, January.
  6. Cardell, Judith B. & Hitt, Carrie Cullen & Hogan, William W., 1997. "Market power and strategic interaction in electricity networks," Resource and Energy Economics, Elsevier, vol. 19(1-2), pages 109-137, March.
  7. Neuhoff, Karsten & Barquin, Julian & Boots, Maroeska G. & Ehrenmann, Andreas & Hobbs, Benjamin F. & Rijkers, Fieke A.M. & Vazquez, Miguel, 2005. "Network-constrained Cournot models of liberalized electricity markets: the devil is in the details," Energy Economics, Elsevier, vol. 27(3), pages 495-525, May.
  8. Kóczy, László Á, 2006. "A recursive core for partition function form games," Research Memorandum 031, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  9. Gately, Dermot, 1974. "Sharing the Gains from Regional Cooperation: A Game Theoretic Application to Planning Investment in Electric Power," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(1), pages 195-208, February.
  10. Kleindorfer, Paul R. & Wu, D. -J. & Fernando, Chitru S., 2001. "Strategic gaming in electric power markets," European Journal of Operational Research, Elsevier, vol. 130(1), pages 156-168, April.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Nem minden hálózat szuper (lehet szubadditív is)
    by Kóczy László in Kóczy játékelmélet blogja on 2011-05-30 13:18:00
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Cited by:
  1. Joris Morbee, 2014. "International Transport of Captured $$\hbox {CO}_2$$ CO 2 : Who Can Gain and How Much?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 57(3), pages 299-322, March.
  2. David Csercsik, 2013. "Competition and cooperation in a PFF game theoretic model of electrical energy trade," IEHAS Discussion Papers 1310, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.

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