Organizations under Large Uncertainty: An Analysis of the Fukushima Catastrophe
This paper analyzes the impacts of the March 11, 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 for the electric power industry by identifying the two shortcomings of a horizontal coordination mechanism: instability under large shocks and the lack of defense in depth.The suggested policy response is to harness the power of Òopen-interface-rule-based modularity by creating an independent nuclear safety commission and an independent system operator owning the transmission grid module in Japan. We propose a transitory price mechanism that can restrain price volatility while providing investment incentives.
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- Rothwell, Geoffrey, 1996. "Organizational Structure and Expected Output at Nuclear Power Plants," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 482-488, August.
- Ricardo Alonso & Wouter Dessein & Niko Matouschek, 2008.
"When Does Coordination Require Centralization?,"
American Economic Review,
American Economic Association, vol. 98(1), pages 145-179, March.
- Bushnell, James & Hobbs, Benjamin F. & Wolak, Frank A., 2009.
"When It Comes to Demand Response, Is FERC Its Own Worst Enemy?,"
The Electricity Journal,
Elsevier, vol. 22(8), pages 9-18, October.
- Bushnell, James & Hobbs, Benjamin & Wolak, Frank, 2009. "When It Comes to Demand Response, is FERC Its Own Worst Enemy?," Staff General Research Papers Archive 13141, Iowa State University, Department of Economics.
- Aoki, Masahiko, 2010. "Corporations in Evolving Diversity: Cognition, Governance, and Institutions," OUP Catalogue, Oxford University Press, number 9780199218530, December.
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