Optimal Transmission Regulation in an Integrated Energy Market

39 Pages Posted: 17 Sep 2010 Last revised: 7 Nov 2014

See all articles by Thomas Tangerås

Thomas Tangerås

Research Institute of Industrial Economics (IFN)

Date Written: June 1, 2010

Abstract

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 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.

Keywords: Multi-national energy market, transmission, supranational regulation, system operation, multi-contracting

JEL Classification: D62, D82, L51, L94

Suggested Citation

Tangerås, Thomas, Optimal Transmission Regulation in an Integrated Energy Market (June 1, 2010). IFN Working Paper No. 838, Available at SSRN: https://ssrn.com/abstract=1678403 or http://dx.doi.org/10.2139/ssrn.1678403

Thomas Tangerås (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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