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Coordination of power network operators as a game-theoretical problem

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  • Martin Palovic

Abstract

We analyse incentive problems in coordination of network operators that purchase services for electricity networks from distributed resources. Such services are often associated with externalities that make the social optimum costly against the individual one. However, a costly reaction of other operators occurs when the social optimum is missed. Regular network situations result in game-theoretical problems like prisoner’s dilemma or chicken that are played in a random order in an infinitely repeated game. The outcome of this complex game-theoretical setting, i.e. adopted strategies, is difficult to predict. Adjustments to network regulation aiming to internalize external effects are discussed as a remedy.

Suggested Citation

  • Martin Palovic, 2022. "Coordination of power network operators as a game-theoretical problem," Bremen Energy Working Papers 0040, Bremen Energy Research.
    • Handle: RePEc:bei:00bewp:0040
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    References listed on IDEAS

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    More about this item

    Keywords

    network operator coordination; game theory; network regulation;
    All these keywords.

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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