Working Paper No. 838

Optimal Transmission Regulation in an Integrated Energy Market

Published: June 1, 2010Pages: 38Keywords: Multi-national energy market; Transmission; Supranational regulation; System operation; Multi-contractingJEL-codes: D62; D82; L51; L94
Published version

Optimal Transmission Regulation in an Integrated Energy Market Thomas P. Tangerås


The capacity of the transmission network determines the extent of integration of a multinational energy market. Cross-border externalities render coordination of network maintenance and investments across countries valuable. Is it then optimal to collect powers in the hands of a single regulator? Should a common system operator manage the entire network? I show that optimal network structure depends on (i ) how the common regulator would balance the interests of the different member states; (ii ) how the gains from market integration vary across countries; (iii ) network characteristics (substitutability versus complementarity); and (iv ) the social cost of operator rent.
 

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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