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Paradoxes in networks supporting competitive electricity markets

Bjørndal, Mette; Jörnsten, Kurt
Working paper
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URI
http://hdl.handle.net/11250/163781
Date
2000
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  • Discussion papers (FOR) [529]
Abstract
Grid investments are normally done in electrical networks in order to achieve a well functioning integrated electricity market and/or making the network more secure, i.e. less sensitive to link failures. In general, there are two aspects to be considered when making a new grid investment, the first is that of detecting beneficial investments, and the second is how to induce them under the chosen market regime. We will show that network "improvements", i.e. strengthening a line or building a new line, may in fact be detrimental to social surplus, and that some agents will have incentives to advocate these changes.
Publisher
Norwegian School of Economics and Business Administration. Department of Finance and Management Science
Series
Discussion paper
2000:10

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