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Energy Economics

Optimal Transmission Regulation of an Integrated Energy Market

Scientific Article in English
Reference
Tangerås, Thomas (2012). “Optimal Transmission Regulation of an Integrated Energy Market”. Energy Economics 34(5), 1644–1655. doi.org/10.1016/j.eneco.2012.01.007

Author
Thomas Tangerås

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.

Thomas Tangerås

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