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Coordination Under Uncertain Conditions : An Analysis of the Fukushima Catastrophe

Author

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  • Masahiko Aoki

    (Asian Development Bank Institute (ADBI))

  • Geoffrey Rothwell

Abstract

This paper analyzes the impacts of the 11 March 2011 earthquake and tsunami at the Fukushima nuclear power plant in Japan, which were amplified by a failure of coordination across the plant, corporate, industrial, and regulatory levels, resulting in a nuclear catastrophe, comparable in cost to Chernobyl. It derives generic lessons for industrial structure and regulatory frame of the electric power industry by identifying the two shortcomings of a horizontal coordination mechanism : instability under large shock and the lack of “defense in depth.†The suggested policy response is to harness the power of “open-interface-rule-based modularity†by creating an independent nuclear safety commission and an independent system operator owning the transmission grids in Japan. We propose a transitory price mechanism that can restrain price volatility while providing investment incentives.

Suggested Citation

  • Masahiko Aoki & Geoffrey Rothwell, 2011. "Coordination Under Uncertain Conditions : An Analysis of the Fukushima Catastrophe," Governance Working Papers 23220, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:govern:23220
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    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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