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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- Ricardo Alonso & Wouter Dessein & Niko Matouschek, 2008.
"When Does Coordination Require Centralization?,"
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- 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.
- 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. Full references (including those not matched with items on IDEAS)