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Optimal transmission regulation of an integrated energy market


  • Tangerås, Thomas P.


The capacity of the transmission network determines the extent of integration of a multi-national energy market. Cross-border externalities render coordination of network capacity valuable. Is it then optimal to collect regulatory powers in the hands of a single regulator? Should a common system operator manage the entire network? I show that optimal network governance depends on (i) whether the centralized regulatory agency is able to balance the interests of the different countries; (ii) asymmetries across countries in the gains from market integration; (iii) network characteristics (substitutability versus complementarity); and (iv) the social cost of operator rent.

Suggested Citation

  • Tangerås, Thomas P., 2012. "Optimal transmission regulation of an integrated energy market," Energy Economics, Elsevier, vol. 34(5), pages 1644-1655.
  • Handle: RePEc:eee:eneeco:v:34:y:2012:i:5:p:1644-1655 DOI: 10.1016/j.eneco.2012.01.007

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    References listed on IDEAS

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    Cited by:

    1. Baldursson, Fridrik M & Lazarczyk, Ewa & Ovaere, Marten & Proost, Stef, 2017. "Cross-border Exchange and Sharing of Generation Reserve Capacity," Working Paper Series 1178, Research Institute of Industrial Economics.
    2. Antonio Estache & Liam Wren-Lewis, 2012. "Supranational Infrastructure Regulation: Institutional Opportunities and Challenges," Working Papers ECARES ECARES 2012-025, ULB -- Universite Libre de Bruxelles.

    More about this item


    Centralization; Multi-contracting; Multi-national energy market; System operation; Transmission regulation;

    JEL classification:

    • 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
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy


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