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Cooperation with Externalities and Uncertainty

  • Helga Habis

    ()

    (Institute of Economics Research Centre for Economic and Regional Studies Hungarian Academy of Sciences)

  • David Csercsik

    ()

    (P zm ny P‚ter Catholic University)

We introduce a new class of cooperative games where the worth of a coalition depends on the behavior of other players and on the state of nature as well. we allow for coalitions to form both before and after the resolution of uncertainty, hence agreements must be stable against both types of deviations. The appropriate extension of the classicakl core concept, the Sustainable Core, is defined for this new setup to test the stability of allocations in such a complex environment. A prominent application, a game of consumers and generators on an electrical energy transmission network is examined in details, where the power in- and outlets of the nodes have to be determined in a way, that if any line instantaneously fails, none of the remaining lines may be overloaded. We show that fulfilling this safety requirement in a mutually acceptable way can be achieved by choosing an element in the Sustainable Core.

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Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 1229.

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Length: 23 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:has:discpr:1229
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  1. Abrell, Jan & Weigt, Hannes, 2010. "Combining Energy Networks," MPRA Paper 65504, University Library of Munich, Germany.
  2. 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).
  3. Predtetchinski, Arkadi & Herings, P. Jean-Jacques & Peters, Hans, 2002. "The strong sequential core for two-period economies," Journal of Mathematical Economics, Elsevier, vol. 38(4), pages 465-482, December.
  4. Giorgia Oggioni & Yves Smeers & Elisabetta Allevi & Siegfried Schaible, 2012. "A Generalized Nash Equilibrium Model of Market Coupling in the European Power System," Networks and Spatial Economics, Springer, vol. 12(4), pages 503-560, December.
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  6. Ray, Debraj, 1989. "Credible Coalitions and the Core," International Journal of Game Theory, Springer, vol. 18(2), pages 185-87.
  7. Hannes Weigt & Jan Abrell, 2012. "Storage and Investments in a Combined Energy Network Model," EcoMod2012 4319, EcoMod.
  8. Zhi-Chun Li & William Lam & S. Wong, 2009. "The Optimal Transit Fare Structure under Different Market Regimes with Uncertainty in the Network," Networks and Spatial Economics, Springer, vol. 9(2), pages 191-216, June.
  9. 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.
  10. Moulin, Herve, 1985. "The separability axiom and equal-sharing methods," Journal of Economic Theory, Elsevier, vol. 36(1), pages 120-148, June.
  11. Florian Leuthold & Hannes Weigt & Christian Hirschhausen, 2012. "A Large-Scale Spatial Optimization Model of the European Electricity Market," Networks and Spatial Economics, Springer, vol. 12(1), pages 75-107, March.
  12. Bi Chen & William Lam & Agachai Sumalee & Qingquan Li & Hu Shao & Zhixiang Fang, 2013. "Finding Reliable Shortest Paths in Road Networks Under Uncertainty," Networks and Spatial Economics, Springer, vol. 13(2), pages 123-148, June.
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