Optimal Transmission Regulation of an Integrated Energy Market

Reprint No. 2012:29

Author(s): Thomas TangeråsYear: 2012 Title: Energy Economics Volume (No.): 34 (5) Pages: 1644–1655
Online article (restrictions may apply)
Preliminary version

The capacity of the transmission network determines the extent of integration of a multi-national energy market. Cross-border externalities render coordination of network capacity valuable. Is it then optimal to collect regulatory powers in the hands of a single regulator? Should a common system operator manage the entire network? I show that optimal network governance depends on (i) whether the centralized regulatory agency is able to balance the interests of the different countries; (ii) asymmetries across countries in the gains from market integration; (iii) network characteristics (substitutability versus complementarity); and (iv) the social cost of operator rent.

Tangerås, Thomas (2012), "Optimal Transmission Regulation of an Integrated Energy Market". Energy Economics 34(5), 1644–1655.

Thomas Tangerås


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