down with mne centric theories market entry and expansion as the bundling of mne and local assets both anderson and gatignon and the uppsala internationalization model see the initial mode of foreign market entry and subsequent modes of operation as unilaterally determined by multinational enterprises mnes arbitraging control and risk and increasing their commitment as they gain experience in the target market oli and internalization models do recognize that foreign market entry requires the bundling of mne and complementary local assets which they call location or country specific advantages but implicitly assume that those assets are freely accessible to mnes in contrast to both of these mne centric views i explicitly consider the transactional characteristics of complementary local assets and model foreign market entry as the optimal assignment of equity between their owners and mnes by looking at the relative efficiency of the different markets in which mne and complementary local assets are traded and at how these two categories of assets match i am able to predict whether equity will be held by mnes or by local firms or shared between them and whether mnes will enter through greenfields brownfields or acquisitions the bundling model i propose has interesting implications for the evolution of the mne footprint in host countries and for the reasons behind the emergence of dragon mnes

natural gas price elasticities variations by region and by sector in the usa abstract this article s primary objective is to estimate the own price and cross price elasticities of demand for natural gas in the residential commercial and industrial sectors by doe region in the usa a simultaneous equations model was developed and its reduced form was employed for natural gas consumption demand elasticity estimation in conjuction with the instrumental price variables data from 1967 to 1978 were used in the estimation but the 1973 oil embargo effect was separated with the use of a dummy variable the demand for natural gas was much more price elastic in the long run than in the short run and the industrial sector was more less price sensitive than others however there were significant interregional and intersectoral variations among the elasticities estimated

short and long run elasticities in energy demand a cointegration approach abstract short and long run energy demand elasticities are estimated on danish annual data for 1948 1990 energy consumption the real price of energy and real gdp appear to be non stationary variables cointegration and error correction methods are therefore applied all estimated parameters have the expected signs and magnitudes and no evidence is found of a structural break in energy demand caused by the increases in real energy prices since 1973 74

two price zones for the german electricity market market implications and distributional effects abstract we discuss the implications of two price zones i e one northern and one southern bidding area on the german electricity market in the northern zone continuous increases in capacity with low variable costs cause large regional supply surpluses in the market dispatch while in the southern zone conventional capacity decreases as the spatial imbalance of supply and load is increasing the current single bidding area more often results in technically infeasible market results requiring curative congestion management measures there is an ongoing discussion about the potential effects of introducing bidding zones in germany this paper applies an electricity sector model with network representation to analyze the system implications and the distributional effects of two bidding zones in the german electricity system in 2012 and 2015 results show a modest decrease in cross zonal re dispatch levels particularly in 2015 however overall network congestion and re dispatch levels increase in 2015 and also remain on a high level for two bidding zones results are very sensitive to more than two bidding zones and additional line investments illustrating the challenge to define stable price zones in a dynamic setting with two bidding areas prices in the model results increase in the southern zone and decrease in the northern zone the average price deviation grows from 0 4eur mwh in 2012 to 1 7eur mwh in 2015 with absolute values being significantly higher in hours when price differences occur stakeholders within zones are exposed to the price deviations to a different extent distributional effects are surprisingly small compared to the wholesale price or different network charges

evaluation of three methods proposed for the computation of inter tso payments in the internal electricity market of the european union parties to the internal electricity market of the european union iem decided in 2001 to abolish the method of pancaking of transmission tariffs for cross border transactions that was originally in place instead they have agreed to implement a system whereby national transmission tariffs provide access to the entire iem this system is supplemented by a scheme of inter tso payments however conflict may arise if the compensation that a country must pay another one is not in accordance with the electrical usage that the former is making of the grid of the latter for instance inter tso compensation methods itc methods implicitly allocate the cost of any existing or new transmission line therefore the adoption of an inefficient method may be an obstacle for building some needed regional grid investments consequently one should give careful consideration to the selection of the itc method this paper analyzes both qualitatively and quantitatively the implementation of the most relevant itc methods that have been considered so far in the european debate when assessing each method from a conceptual point of view considerable attention is devoted to the critical examination of its main underlying assumptions

knowledge market failure and the multinational enterprise a reply debate is an indication that an issue warrants discussion the comments of james love and donald mcfetridge in this issue are fine statements that articulate a received wisdom their comments differ with each other and these differences remind us that there is less consensus in our understanding of internalization and transaction costs than commonly supposed if we do not address all of the commentators specific points it is not for lack of appreciation but because it is our belief that a fuller vision of the terrain already mapped and that which is yet uncharted would provide a more useful basis for exploration and discovery a listing of issues is the task of a referee while a published debate might perform a useful task by laying out the contours of the research tradition and future

optional two part tariffs constrained by price caps abstract cost reducing incentives possibly generated by price cap regulation may invoke allocative inefficiencies however if the regulated firm can offer optional two part tariffs in addition to the price caps then pareto optimal outcomes will be reached under quite general conditions

an incentive mechanism for electricity transmission expansion in mexico abstract this study proposes an incentive regulatory framework for expanding electricity transmission in mexico a two part pricing model is implemented within a combined merchant regulatory structure three cases are considered in the first a monopolist with postage stamp tariffs serves the whole country using uniform prices in the second case one firm holds a regional monopoly in each of the five electricity areas in the third a monopolist operates in all areas of the national electricity system and discriminates in the prices it charges in each of the regions this approach is described and then applied to the mexican electricity transmission network using real data the study compares all three cases in terms of profits capacity increases and network expansion the results are found to depend on two effects the economies of scale effect in which the maximum level is reached with a single network and the discriminatory effect that results when a firm can discriminate among types of consumers the economies of scale effect produces greater capacity and network expansion whereas the discriminatory effect increases profits

min max fair power flow tracing for transmission system usage cost allocation a large system perspective power flow tracing has been suggested as an approach for evaluating 1 transmission system usage tsu cost and 2 loss mw cost for generator and load entities in the system recently optimal power flow tracing methods have been proposed to explicitly model fairness constraints in the tracing framework this paper further strengthens the tracing compliant min max fair cost allocation approach the min max model proposed in this paper is robust it addresses concerns like scalability numerical stability and termination in a finite number of steps while searching the optimal solution we also propose a methodology to model discoms and gencos as coalition within min max framework case studies on an all india network of 1699 nodes and comparison with average participation and marginal participation methods bring out the better conflict resolution feature of the proposed approach a method to model hvdc lines within the marginal participation scheme is also proposed quantitative and qualitative comparison of various tsu cost allocation methods on such a large system is another noteworthy contribution of the paper

energy consumption and economic activity in industrialized economies a note abstract in industrialized countries the income elasticity of primary energy demand is not far off unity furthermore it can be argued that there is little use in distinguishing between short and long term income elasticities a long term income elasticity does not have a direct impact on energy demand and hence it is of doubtful use in energy demand projections via an aggregate oecd model it was estimated that the short term impact of prices on primary energy demand is about 0 15 while the long term impact is 0 43 but increasing over time

market based rate design for recovering merchant transmission investment merchant transmission projects mtps are primarily market solutions for importing inexpensive power when this energy is available as a market driven solution full recovery of the investment is not guaranteed in general the recovery is based on transmission service charges and the value of incremental financial transmission rights ftrs created by the project since ftrs are valuable only when the system is constrained the ftr s value diminishes as the constraint is eliminated by the mtp hence the mtp will be commercially viable only if its transmission capacity is fully subscribed otherwise the mtp will likely not be built

the demand for energy in the uk a general equilibrium analysis abstract previous research into the demand for energy has treated economic activity as an explanatory variable however economic theory suggests that economic activity is not independent of energy prices and energy demand we explore the two way causality between energy demand and economic activity in the context of a macroeconometric model of the uk economy inter alia this study suggests that the demand for energy is more price elastic in general equilibrium than it is under the more conventional assumptions of partial equilibrium

marginal pricing of transmission services a comparative analysis of network cost allocation methods a strict marginal network pricing policy is not able to generate enough revenues to recover the cost of the primary transmission service other related network services are ignored here this cost recovery problem requires the stipulation of a complementary charge which completes the network marginal revenues this paper evaluates numerically and qualitatively three different allocation methods of the complementary charge marginal participation factors mean participation factors and benefit factors the evaluation has been applied to the spanish electrical system model

a simple regulatory incentive mechanism applied to electricity transmission pricing and investment the informationally simple approach to incentive regulation applies mechanisms that translate the regulator s objective function into the firm s profit maximizing objective these mechanisms come i

does size matter simulating electricity market coupling between colombia and ecuador since the beginning of the liberalization era the integration of electricity markets has been promoted in many regions arguing that this will bring benefits in terms of security of supply and efficiency however little progress has been made in the last decades in most regions with some successful exceptions such as the nordpool and more research is needed to determine under which circumstances those benefits are achievable we develop a system dynamics model to analyze the potential benefits and risks of market coupling and to improve the understanding of its implications on policy design this model allows us to simulate the long term behavior of two interconnected countries under different interconnection scenarios and different policies regarding capacity payments the analysis is focused on colombia and ecuador which have been trading electricity for more than 10 years and offer an interesting case study given their complementarity in terms of hydropower supply however the results of the simulations show that this complementarity is not necessarily exploited while the relative size of the countries determines the magnitude of the potential benefits of integration the interconnector capacity plays a key role in achieving those benefits additionally both factors significantly affect the outcome of policies such as the implementation of capacity payments we conclude that capacity policies and integration policies need to be coordinated

transmission system management and pricing new paradigms and international comparisons the transmission system once the necessary but nearly invisible component of the electric power system is now the focus of physical electrical and financial attention of the utility and more significantly their potential suppliers customers this paper has three primary objectives the first is to present a discussion of a new paradigm for the electric power industry the second is to review transmission pricing options specifically those utilizing either long run lrmc or short run srmc marginal cost based approaches the third is to provide a review of innovative approaches to transmission asset management and finance as seen from international experience

the firm as an epistemic community the knowledge based view revisited based on a social constructivist conceptualization of knowledge as residing in groups of practitioners epistemic communities this paper proposes a new perspective on the knowledge based view of the firm and sketches the outline of a new research agenda it argues that the cost of governing knowledge processes depends as much on the cognitive background of the exchange partners as on the tacitness of the knowledge firms exist because they may form epistemic communities in their own right with enabling and motivational properties superior to those of markets in the governance of knowledge processes across epistemic boundaries establishing a firm as an epistemic community requires transaction specific investments that are difficult to realize under market forms of governance

the explicit economics of knowledge codification and tacitness this paper attempts a greater precision and clarity of understanding concerning the nature and economic significance of knowledge and its variegated forms by presenting the skeptical economist s guide to tacit knowledge it critically reconsiders the ways in which the concepts of tacitness and codification have come to be employed by economists and develops a more coherent re conceptualization of these aspects of knowledge production and distribution activities it seeks also to show that a proposed alternative framework for the study of knowledge codification activities offers a more useful guide for further research directed to informing public policies for science technological innovation and long run economic growth copyright 2000 by oxford university press

exploring the relationship between energy use and economic growth with bivariate models new evidence from g 7 countries abstract there is a rapidly growing literature on the interaction between energy use and economic development with many analysts drawing policy conclusions on the basis of granger causality tests that involve only an energy and an economic variable this paper attempts to demonstrate empirically that such studies although useful for certain applications may be of limited use for policy purposes after outlining theoretical and methodological issues associated with such approaches i apply bivariate energy economy causality tests for canada france germany italy japan the united kingdom and the united states using aggregate and sectoral data and three different modern econometric methods the results which are often contradictory or economically implausible illustrate explicitly that one should be cautious when drawing policy implications with the aid of bivariate causality tests on small samples i therefore underline the importance of utilizing as large sample sizes as possible and using multivariate models which are closer to economic theory accommodate several mechanisms and causality channels and provide a better representation of real world interactions between energy use and economic growth

modelling the energy output ratio abstract the elasticity of energy use with respect to national output has been estimated by various methods with sometimes seemingly contradictory results this study attempts to reconcile these various estimates by modelling the energy output ratio and deriving the corresponding cross section and time series elasticities from this model

allocation of fixed costs in distribution networks with distributed generation in this paper we propose a method for the allocation of fixed capital and nonvariable operation and maintenance costs at the medium voltage mv distribution level the method is derived from the philosophy behind the widely used mw mile methodology for transmission networks that bases fixed cost allocations on the extent of use that is derived from load flows we calculate the extent of use by multiplying the total consumption or generation at a busbar by the marginal current variations or power to current distribution factors pidfs that an increment of active and reactive power consumed or generated in the case of distributed generation at each busbar produces in each circuit these pidfs are analogous to power transfer distribution factors ptdfs unlike traditional tariff designs that average fixed costs on a per kwh basis across all customers the proposed method provides more cost reflective price signals and helps eliminate possible cross subsidies that deter profitable in the case of competition or cost effective in the case of a fully regulated industry deployment of dg by directly accounting for use and location in the allocation of fixed costs an application of this method for a rural radial distribution network is presented

knowledge market failure and the multinational enterprise a comment the purpose of this note is to comment briefly on two papers published in this journal kogut and zander 1993 and love 1995 kogut and zander k z argue that market failure is not necessary to explain the existence of multinationals or indeed any firm love argues that the existence of a firm necessarily reflects a market failure but that opportunism is not necessary for market failure to occur i have problems with the logic of both papers

2 the institutional structure of production 1 prize lecture to the memory of alfred nobel december 9 1991 this abstract was borrowed from another version of this item

wheeling of power under deregulated environment of power system a bibilographical survey the power industry is moving rapidly from regulated conventional setup to a deregulated environment there is an urgent need to keep a track of international experiences and activities taking place in this emerging field this paper gives a bibliographical survey and general backgrounds of research and development in the field of power system wheeling under deregulated environment based on over 170 published articles wheeling in general and the establishment of wheeling rate in particular are subjects of extensive debate today this will be very much useful for all countries especially those developing countries which are moving toward the unbundling of electricity supply industry esi the collected literature have been divided into many section so that new researchers do not face any difficulty for obtaining literature particularly in the area of wheeling of power under deregulated environment

three laws of energy transitions the paper formulates and explores a hypothesis on three general energy transition laws the law of stable long term energy costs to income ratio the law of improving energy quality and the law of growing energy productivity these laws are essential for shaping long term projections and checking for their consistency all three are rooted in amazingly stable in time and universal across countries energy costs to income ratios limited energy purchasing power sets up thresholds which if exceeded bring asymmetry to energy demand to price elasticity the author believes that the theoretical postulate on the substantial substitution among production factors which is used in the production functions theory may be incorrect in reality innovations mainly lead to the substitution of a low quality production factor with the same yet of a better quality improving energy quality with stable costs to income ratio is accompanied by growing energy productivity energy costs to income thresholds are indicators allowing for better projections of oil prices

allocation of canadian natural gas to domestic and export markets canadian natural gas is allocated to domestic and export markets using a non linear optimization model efficient near term prices are low to stimulate consumption and reduce reserves of shut in natural gas many near optimal depletion paths also exist implying greater importance of non efficiency criteria for selecting a socially optimal depletion path finally for canadian consumption decisions through the early 1990s the value of perfect information about future export prospects is likely small mistakes in allocating gas to domestic markets to that time are unlikely to cause serious losses in any of several performance measures including producer surplus economic rent l allocation du gaz naturel canadien entre le marche domestique et les marches d exportation on alloue le gaz naturel canadien entre les marches domestique et 6trangers a l aide d une modele d optimisation non lineaire les prix efficients a court terme sont bas a la fois pour stimuler la consommation et pour reduire les reserves de gaz naturel des puits fermes on peut identifier plusieurs sentiers d epuisement quasi optimaux qui donnent une importance relativement plus grande aux criteres autres que l efficacite dans la selection d un sentier d epuisement socialement optimal enfin pour ce qui a trait aux decisions de consommation au canada jusque dans les debuts des annees 1990 il appert que la valeur d une information parfaite quant aux possibilites d exportation n est pas susceptible d etre grande de plus des erreurs dans l allocation du gaz aux marches domestiques jusqu a ce moment ia ne sont pas susceptibles de causer des pertes enormes quels que soient les indicateurs de performance y compris le surplus au producteur i e la rente economique

a memoir and reflection knowledge and an evolutionary theory of the multinational firm 10 years later the production of the 1993 article awarded the jibs decade award was written during a time when ideas regarding knowledge and the international expansion of the firm confronted a hostile audience the sources of these ideas were directly related in winter s and roger s prior work but also to a broader literature on category errors and technology transfer the theory of the firm as a social community is a distinctly sociological theory and though sharing many key ideas with the resource based view that developed at the same time is deeply opposed to engineering conceptions of firms as legomodular pieces that can be easily shifted bought and sold we describe our individual biographies and the subsequent intellectual development of the

spot pricing of capacities for generation and transmission of reserve in an extended poolco model the poolco model is emerging as one of the most acceptable options for organizing the spot market of electricity although the model represents a reasonable and safe transition from present industry practices to what is required in a competitive electricity market many important issues remain to be resolved in particular issues regarding reliability related services are of a special concern to the industry this paper is devoted to the issue of reserve service delivery and pricing the poolco model is extended in this paper to include spot pricing of reserve generation and transmission capacities as well as demand side bidding in the authors extended model suppliers submit bids for power as well as for reserve capacities a new formulation of the extended security constrained economic dispatch which allocates both power and reserve generation resources is presented in this paper the dispatch of the resources is constrained by limitations of system transmission capacities the proposed formulation is considered to be relevant not only in the poolco but in a more general setup an illustrative example is used to introduce concepts and present results finally some general issues regarding formats of proposals balance of payments and uniqueness of the prices that apply equally to both the original and extended poolco models are discussed

more critical comments on knowledge based theories of the firm this paper continues the critique of knowledge based theories of the firm that was undertaken in foss foss n j 1996a knowledge based approaches to the theory of the firm some critical comments organ sci 7 5 470 476 specifically criticizing the reasoning in kogut and zander kogut b u zander 1996 what firms do coordination identity and learning organ sci 7 5 502 518 and conner and prahalad conner k r c k prahalad 1996 a resource based theory of the firm knowledge versus opportunism organ sci 7 5 477 501 i argue that kogut and zander kogut b u zander 1996 what firms do coordination identity and learning organ sci 7 5 502 518 attempt to explain firm organization in terms of a preference for such organization a distinctly non economic mode of explanation and that conner and prahalad fail to sufficiently characterize the nature of the firm because they identify firm organization with the employment contract and neglect asset ownership

knowledge market failure and the multinational enterprise a theoretical note this article offers a critique and extension of recent work by bruce kogut and udo zander kogut and zander are correct to argue that opportunism is unnecessary to explain the existence of the multinational but wrong to infer that this indicates an absence of market failure they have identified an important class of transaction costs and market failure which arises in the absence of opportunism but do not cat doubt on the market failure approach to the theory of the multinational their argument that they have identified an important source of ownership advantage is unconvincing and is not supported by the empirical evidence however kogut and zander s work is of considerable significance but in areas different from those that they highlight

pricing natural gas distribution in mexico abstract we examine regulation of distribution tariffs in the mexican natural gas industry average revenue in each period is constrained not to exceed an upper bound and is calculated as the ratio of total revenue to output in the current period this regime implies incentives for strategically setting two part tariffs the usage charge is typically dropped to its lowest feasible level while the fixed charge is raised to compensate for the loss of profit the regime also creates a stochastic effect that implies decreased values of consumer surplus for lower levels of risk aversion and uncertainty

opening the grey box social communities knowledge and culture in acquisitions international acquisitions are today the most important foreign direct investment vehicle and the ensuing integration processes are notoriously fraught with problems we situate discuss and develop the main results of an early study in the knowledge based view tradition the award winning bresman birkinshaw and nobel 1999 article to enhance and develop the central contributions regarding social communities knowledge and culture we use the metaphor of unpacking the grey box we argue that heavy socialization is a rational learning strategy even if the acquirer aims at appropriating the target s technology or wishes to impose its dominant logic

determination of network rental components in a competitive electricity market the locational marginal pricing lmp based settlement results in a surplus collected by the system operator from the consumers the nonlinear transmission losses and the constrained operation of the power system due to operating limits such as power flow limits on transmission lines cause the accumulation of this surplus this accumulated revenue referred to as the network rental in this paper has two main components loss rental and constraint rental this paper develops a method to calculate these different rental components paid by each consumer by combining the power flow tracing and kkt optimality conditions this yields quantitative determination of how each consumer has overpaid in the form of loss rental and constraint rental which in turn can be used to get a better insight of how the rental is accumulated simple three and four bus systems are used to demonstrate the proposed method

elasticities ratios and energy modelling abstract this paper shows certain pitfalls in calculating elasticities and ratios by studying some commonly used econometric models of energy it is then argued that income elasticity could be considered stable both in the short run and in the long run lastly we have derived a formula which clearly relates the income elasticity to the energy income ratio the difference of elasticities among the developing and developed countries can be explained directly from the formula

residential energy demand in oecd countries and the role of irreversible efficiency improvements abstract after undergoing substantial changes during a period of high energy prices household energy demand did not rebound in times of declining energy prices as might have been expected hence other factors such as irreversible improvements in technical efficiency must be understood in order to describe both past and future household energy demand in this paper we consider irreversible efficiency improvements as a major reason for the moderate growth in energy demand after the plummeting of the oil price in 1985 we test different econometric models to take into account efficiency indicators the major conclusions of our investigation are i price elasticities are different for rising and falling prices for the latter they are close to zero implying a low rebound effect in the residential sector ii technical efficiency is an important parameter for describing and forecasting energy demand and iii income elasticities turn out to be higher once we incorporate indicators of technological efficiency in the process of estimating energy demand

evaluation of alternatives for power system coordination and pooling in a competitive environment the paper defines and classifies essential issues that relate the need for electric power system coordination with the increasing development of competition principles are formulated and a coordination model and a market structure are proposed emphasizing the need for economic dispatch in the wholesale market a detailed comparison is made of the market and pooling implementations developed in argentina and chile countries that have pioneered the creation of competitive markets in the electric energy sector an evaluation of strengths and weaknesses of those two implementations is included

the underdetermined knowledge based theory of the mnc in this note we revisit two core propositions of the knowledge based view of the firm found in the seminal work of kogut and zander 1 that multinational corporations mncs exist because transfers and re combinations of knowledge occur more efficiently inside mncs than between mncs and third parties and 2 that the threat of opportunism is not necessary although it may be sufficient to explain the existence of the mnc their knowledge based view shifted the conceptualization of the firm from an institution arising from market failure and transaction costs economizing to a progeny of superior knowledge governance we question these conclusions arguing that firms are but one of the many types of epistemic communities possessing and nurturing procedural norms identity and the cognitive linguistic and reflexive attributes conducive to efficient exchange and re combination of knowledge among their members important insights may be gained by applying the concept of epistemic communities implicit in the knowledge based perspective beyond firm level hierarchies journal of international business studies 2011 42 427 435

allocation of expansion transmission costs areas of influence method versus economical benefit method the open access to the transmission network and the methods to allocate its costs are the key point that allows free competition in deregulated electric markets all existing allocation methodologies have advantages and disadvantages that depend on their own features the power system characteristics and the price structure of the market the comparison of network cost allocation methods has been the aim of many studies in order to improve them in this paper the analytical relation between areas of influence method and a method based on the economical benefit for allocation of transmission costs is presented common points of both methodologies are discussed as well as their advantages to be applied to pay transmission network expansions it is concluded that both methodologies are equivalent only under certain conditions

the sensitivity of consumption of oil products to price changes an econometric investigation abstract this paper presents a small econometric model of the supply and demand of motor spirit diesel fuel oil and other gas diesel oil by modelling at this level of disaggregation it is possible to identify the dynamic structure of each market and estimate own price and cross price elasticities

border flow rights and contracts for differences of differences models for electric transmission property rights in this paper a property rights model for electric transmission is proposed and its properties analyzed the proposed rights called border flow rights support financial hedging of transmission risk and merchant transmission expansion through associated financial rights called contracts for differences of differences these financial rights allow for forward trading of both energy and transmission by a unified exchange avoiding the bifurcation in current markets between decentralized long term energy trading and centralized long term transmission trading such long term trading can help to support the financing of both generation and transmission assets we consider incentive properties of such a right in the absence of lumpiness economies of scale and market power

international acquisition success social community and dominant logic dimensions international acquisitions intended to achieve knowledge transfers and improvements of innovation capacity can only be successful if the acquirer devotes balanced attention to a building a unified social community and b achieving requisite commonality in dominant logic the balance between these two dimensions of success depends on the activity class considered in some activity classes imposing the acquiring firm s dominant logic will be dysfunctional and therefore the post acquisition managerial focus may need to shift towards social community building bresman birkinshaw and nobel s 1999 acclaimed jibs paper should be commended for identifying the social community dimension as a critical driver of international acquisition success

marginal pricing of transmission services an analysis of cost recovery this paper presents an in depth analysis of network revenues computed with marginal pricing and in particular it investigates the reasons why marginal prices fail to recover the total incurred network costs in actual power systems the basic theoretical results are presented and the major causes of the mismatch between network costs and marginal revenues are identified and illustrated with numerical examples some tutorial and others of realistic size the regulatory implications of marginal network pricing in the context of competitive electricity markets are analyzed and suggestions are provided for the meaningful allocation of the costs of the network among its users

impact of network payment schemes on transmission expansion planning with variable renewable generation abstract a large number of studies have dealt with the transmission expansion planning tep problem however few investigations have focused on analyzing the impacts of network payment schemes on network configuration and the benefits losses distribution among the participants in electricity markets in this paper we propose a multi annual transmission expansion planning model considering four different network payment schemes to finance the construction of new transmission lines seeking to reduce the total system costs wind and solar power generation are included in the model taking into account their variability the proposed models are reformulated as mixed integer linear programming milp problems we use seven performance metrics related with congestion nodal prices and generator benefits among others to evaluate the effect of each payment scheme a realistic case study based on the main power system in chile is analyzed to illustrate the proposed models it is shown that integrating line cost recovering equations into the tep model may result into a more realistic and less congested power network also total system cost is highly related with transmission tariff discrimination in that way tariffs with high location dependence perform better in the case studied the chilean power system

a nash approach to planning merchant transmission for renewable resource integration major transmission projects are needed to integrate and to deliver renewable energy re resources cost recovery is a serious impediment to transmission investment a negotiation methodology is developed in this study to guide transmission investment for re integration built on nash bargaining theory the methodology models a negotiation between an re generation company and a transmission company for the cost sharing and recovery of a new transmission line permitting delivery of re to the grid findings from a six bus test case demonstrate the pareto efficiency of the approach as well as its fairness in that it is consistent with one commonly used definition of fairness in cooperative games the nash cooperative solution hence the approach could potentially be used as a guideline for re investors the study also discusses the possibility of using re subsidies to steer the negotiated solution towards a system optimal transmission plan that maximizes total net benefits for all market participants the findings suggest that re subsidies can be effectively used to achieve system optimality when re prices are fixed through bilateral contracts but have limited ability to achieve system optimality when re prices are determined through locational marginal pricing this limitation needs to be recognized in the design of re subsidies

bootstrapping for consistent standard errors for translog price elasticities some evidence from industrial electricity demand abstract this note extends the hirschberg aigner method for deriving price elasticities of various time differentiated electric inputs using estimated cost share elasticities in a translog formulation the h a method leaves out an important component of variance as the estimated cost share elasticities are themselves estimates and are not known quantities this omission leads to overestimating the significance levels of price elasticities with our extension using repeated sampling techniques such as bootstrapping the price elasticity estimates significant when derived through the h a method now become insignificant this points out the need for such an extension when evaluating computed price elasticity estimates particularly when these are used in policy making

an effective transmission network expansion cost allocation based on game theory the expansion of transmission systems impacts many entities in the market environment each entity may fare better or worse as a result of congestion relief in the presence of new investments negatively affected firms exert their influence to prevent the expansion from taking place the opposition of these firms and the lack of appropriate incentives results in insufficient investments in transmission assets the network is being frequently used at its maximum limits leading to economic inefficiencies and reduced reliability hence there is a need for effective incentive schemes for network expansion in this paper we propose a game theory based scheme for the allocation of transmission expansion costs among market entities the allocation takes into account both the physical and economic impacts of the new transmission assets and the influence of each firm on the expansion decision this is the first scheme designed to give all market participants explicit incentives to support the expansion the application of the allocation solution to the garver six bus system is presented to illustrate the capabilities of the proposed method

the evolutionary view of the mne and the future of internalization theory kogut and zander s 1993 jibs article which developed an evolutionary perspective on the multinational enterprise mne has had three critical impacts on mne research first it has stimulated scholars to conduct more eclectic empirical analyses which should include both transaction cost related parameters and broader learning competence related variables second it has usefully argued that the rigorous study of mne behavior does not need to reply upon the williamsonian behavioral assumption of opportunism third it has implicitly suggested a new path to be followed by internalization theory scholars in order to remain relevant to the field of international business the transaction cost economics lens adopted in internalization theory clearly remains critical to any analysis of mne strategy with impacts on the boundaries of the firm in addition the co evolution of the mne s governance structure and its technological competences determines present and future strategy choices here both transaction cost considerations and learning effects influence strategy selection

the economic regulation of private industries by price constraints regulation of some newly privatised industries in the uk has been implemented by restricting annual price increases this paper analyses the two forms which such regulation has taken the tariff basket approach applied to british telecom and the average revenue constraint imposed upon british gas and the british airports authority the incentives given by the tariff basket constraint to a profit maximiser are likely to result in a more efficient price structure than would occur under an average revenue constraint demonstrating that the former is generally a superior form of regulation

cost of transmission system usage based on an economic measure throughout today s unbundled power systems it is assumed that the transmission system is a natural monopoly and therefore it should be regulated to compensate for the revenue requirements of the owners of the transmission system and encourage its future expansion transmission pricing schemes should be designed fairly also the schemes must aim to achieve the objective of maintaining system security by encouraging proper operation and maintenance of existing and investment in new facilities in this paper based on a simple economic principle a novel method for allocation of the fixed cost of the transmission system to agents using these facilities is developed this new method introduces the concept of critical capacity of a line and considers congestion in the transmission system to allocate the share of the transmission system revenue requirement that each agent has to provide identifying and charging the agents who cause congestion is very important as it sends the correct economic signal to transmission network users this is a novel feature of this method thus making it most suitable for systems where congestion does occur we also point out briefly the reliability concerns of the new method a simple eight bus network representative of the pjm iso system together with its market pricing mechanism is used as a competitive power system to illustrate the main features of the proposed method

on distributive effects of optimal regulation for power grid expansion to date the distributive implications of incentive regulation on electricity transmission networks have not been explicitly studied in the literature more specifically the parameters that a regulator might use to achieve distributive efficiency under price cap regulation have not yet been identified to discern these parameters is the motivation for the research presented in this paper we study how different weight parameters affect the distributive characteristics of optimal price cap incentive regulation for electricity transmission we find that a regulator s use of ideal laspeyres weights tends to be more beneficial for the transco consumers than for consumers the transco

welfare effects of discriminatory two parts tariffs constrained by price caps abstract tariff discrimination by a regulated monopolist is sometimes politically unfeasible on distributional grounds however under a simple regulatory constraint discriminatory two part tariffs provide a pareto improvement this suggests an implementable reform of the uniform tariff used in some public utilities

a new transmission tariff allocation model based on bilevel programming this paper proposes a flow based approach for the transmission tariff allocation problem based on the notions of long run marginal cost lrmc and nodal exchange factors nefs a worst case power flow expressed in terms of nefs is formulated to characterize the system state additionally the nefs optimal values are determined considering a specific criterion to compute tariffs the resulting problem is formulated as a bilevel program the upper level is a worst case power flow that maximizes line flows taking into account the transmission tariffs computed in the lower level the criterion considered in the lower level aims to minimize the variation range of transmission tariffs which is particularly desirable to provide incentives for renewable sources installed far away from load centers the resulting bilevel problem may have multiple solutions here the uniqueness in tariffs is preserved by solving an alternative problem once both the generation dispatch and the variation range of transmission tariffs are known numerical results are provided for a 6 bus system and the ieee 118 bus system

fuel consumption for road transport in the usa abstract this study provides both a historical analysis of fuel demand for road transport and an example of using econometric results for projections fuel consumption by all motor vehicles in the usa has been analysed by splitting total demand into passenger car truck and other demands distance travelled and fuel efficiency equations have been estimated for both the passenger car fleet and trucks an essentially five equation model has been constructed and used to simulate likely fuel demand patterns up to 1990

transmission cost allocation by cooperative games and coalition formation the allocation of costs of a transmission system to its users is still a pending problem in many electric sector market regulations this paper contributes with a new allocation method among the electric market participants both cooperation and competition are defined as the leading principles to fair solutions and efficient cost allocation the method is based mainly on the responsibility of the agents in the physical and economic use of the network their rational behavior the formation of coalitions and cooperative game theory resolution mechanisms the designed method is applicable to existing networks or to their expansion simulations are made with sample networks results conclude that adequate solutions are possible in a decentralized environment with open access to networks comparisons with traditional allocation systems are shown and cooperative game solutions compare better in economic and physical terms

marginal pricing and supplement cost allocation in transmission open access the application of marginal costing to transmission pricing in open access schemes requires the collection of a supplement to finance the transmission systems the paper describes the application of marginal cost based pricing in the chilean power system and the difficulties faced in allocating the supplement among parties involved alternative methods for defining the allocation are formulated generalized generation and load distribution factors for cost allocation are formulated and implemented the methods are applied to allocate payments for transmission services provided by the transmission network and by a distribution company

foreign influence control and indirect ownership implications for productivity spillovers how does the presence of controlled foreign firms affect the productivity of domestic firms in the same industry we revisit the historical distinction between control and influence by the foreign owner and define controlled foreign firms as those with a foreign ultimate owner holding 50 or more of voting shares connecting insights from new internalization theory with knowledge based views of the mne we posit that controlled foreign firms will generate larger productivity spillovers than non controlled foreign firms we use a firm level panel dataset of 575 844 manufacturing firms 2 343 495 observations across 20 european countries to test our proposition we pay careful attention to how firms are categorized as foreign taking into account both direct and indirect ownership links allowing for indirect ownership turns out to be pivotal there are just as many indirectly controlled foreign firms as foreign firms captured with direct ownership data we find positive horizontal spillovers from controlled foreign firms and zero spillovers from non controlled foreign firms interestingly the strongest positive spillovers come from the indirectly controlled foreign firms the implications of our study extend beyond productivity spillovers to areas such as cross border m as joint ventures mne strategies of legitimation and corporate groups

a more fair power flow based transmission cost allocation scheme considering maximum line loading for n 1 security this paper proposes an efficient approach to transmission fixed cost allocation in a pool based electricity market that takes into consideration n 1 secure annual system operation the optimal capacity of a transmission facility is defined as the maximum power flow the facility may face under a contingency situation for a certain system snapshot in this pricing approach for each time interval the largest optimal capacity of a transmission facility is calculated for all n 1 conditions considering a security constrained optimal power flow charges for each facility are based on the facility usage of the largest optimal capacity for all time intervals during one or more years network usage is determined by generalized distribution factors and three variations of the mw mile method for pricing counter flows are investigated for the proposed cost allocation method the three proposed pricing methods are applied to the ieee 24 bus reliability test system and compared with other pricing methods

two part tariffs as regulatory constraints abstract this paper introduces a regulatory two part monopoly pricing mechanism with desirable properties assuming that firm managers are informed about cost and demand functions no detailed prior information of the regulator about the regulated firm and its environment is required also subsequent observations of the regulator are restricted to verifiable bookkeeping data nevertheless the pricing formula is simple and easily interpreted the firm may freely choose the variable price of the two part tariff as long as the fixed part obeys a constraint the firm will then in every period receive an approximation to the welfare change caused by its price changes over the last period contrary to most other suggestions for incentive pricing the current approach requires no government subsidies

electricity demand analysis using cointegration and arima modelling a case study of turkey in the early 2000s the republic of turkey has initiated an ambitious reform program in her electricity market which requires privatization liberalization as well as a radical restructuring the most controversial reason behind or justification for recent reforms has been the rapid electricity demand growth that is to say the whole reform process has been a part of the endeavors to avoid the so called energy crisis using cointegration analysis and autoregressive integrated moving average arima modelling the present article focuses on this issue by both providing an electricity demand estimation and forecast and comparing the results with official projections the study concludes first that consumers respond to price and income changes is quite limited and therefore there is a need for economic regulation in turkish electricity market and second that the current official electricity demand projections highly overestimate the electricity demand which may endanger the development of both a coherent energy policy in general and a healthy electricity market in particular

the significance of bruce kogut s and udo zander s article knowledge of the firm and the evolutionary theory of the multinational corporation the journal of international business article knowledge of the firm and the evolutionary theory of the multinational corporation by kogut and zander 1993 is an important marker in the transition of the dominant conceptual model of the multinational firm from the market failure approach of internalization theory and transaction cost economics theory to the market imperfections approach of capabilities or knowledge based theories of the firm in a similar manner peter buckley and mark casson s 1976 book the future of multinational enterprise while not the first or necessarily the most comprehensive contribution to the application of coasian economics to the mne marked the switch of focus from market power to market failure as an explanation for the existence of mnes while the article itself is an important and well cited contribution it is also a fundamental statement that a new theory has arrived to supplement and partly to displace the old also similar to buckley and casson it arrived at a time that the same transition was gaining traction in the more generic field of business policy and strategy the ascendancy of williamson s 1975 version of transaction cost economics in the earlier case and the rise of a variety of resource based capability based and knowledge based models barney 1991 teece et al 1997 grant 1996 in the case of kogut and zander the critical distinction made by kogut and zander is that if the value of the firm is defined as its store of knowledge and expansion of the firm s boundaries is related to the transfer of knowledge then inescapable uncertainties about the value of this knowledge are enough to explain internal transmission and therefore the existence of firms opportunism is not required therefore they find the critical role that opportunistic behavior by transactional partners in markets plays in internalization models is not necessary but leads to an overdetermined model kogut and zander maintain that differential costs of transmission of knowledge within the firm journal of international business studies 2003 34 495 497 2003 palgrave macmillan ltd all rights reserved 0047 2506 25 00

on energy coefficients and ratios abstract this paper examines the methodological issues of the debates surrounding the problem of measuring energy consumption and the use of the concept of energy coefficients it also investigates the brookes hypothesis of a development effect on energy consumption the results suggest that when energy consumption is appropriately measured the energy coefficients are very consistent and fall steadily from high values tending asymptotically to one

uniform marginal pricing for the remuneration of distribution networks a new method for distribution access via uniform pricing for the remuneration of distribution networks is presented the proposed approach merges in a unified framework the investments the optimal network operation requirements the effect of the price elasticity of demand and the application of hourly pricing for demand side management purposes hourly uniform marginal prices understood as tariffs of use of the network are obtained from maximum social welfare condition sending efficient signals to the utility and consumers related to the optimal operation of the grid and use of the energy at peak and valley hours this method is used in the context of a performance based ratemaking regulation to get model companies from operational optimized real networks capital fees are integrated in the marginal tariff of use by means of the new replacement value concept broadly used in yardstick competition the model is stated as a mixed integer linear optimization problem suitable to be solved through well known linear programming tools the methodology has been successfully tested in a 42 bus test distribution network

knowledge transfer in international acquisitions this paper reports on a multimethod study of knowledge transfer in international acquisitions using questionnaire data we show that the transfer of technological know how is facilitated by communication visits meetings and by time elapsed since acquisition while the transfer of patents is associated with the articulability of the knowledge the size of the acquired unit and the recency of the acquisition using case study data we show that the immediate post acquisition period is characterized by imposed one way transfers of knowledge from the acquirer to the acquired but over time this gives way to high quality reciprocal knowledge transfer

an aumann shapley approach to allocate transmission service cost among network users in electricity markets this work presents a new methodology for the allocation of transmission service cost among network users in energy markets the proposed method is based on an optimization game theoretic framework aumann shapley that retains the desirable properties of other existing methodologies such as the average participations factors apf and long run marginal costs lrmc the approach is shown to be computationally feasible and presents desirable characteristics in terms of economic coherence and isonomy computational results are presented for the brazilian power system and compared with those obtained by three other methodologies lrmc apf and the current method adopted in brazil

elasticities science or fiction abstract apart from discrepancies in statistical data series the most frequent source of inconsistencies among elasticity estimates is the model specification and the interpretation of empirical results this paper investigates this issue and in particular highlights the misconception that elasticities can scientifically and uniquely be determined by econometric techniques however it is common knowledge that econometric methods constitute a very good tool for analysing the past thus the main message of this exercise is that in the absence of complete specification there are important trends in the elasticities themselves such trends are very crucial and need to be interpreted if elasticities are to be used for forecasting purposes

energy and economic growth in industrializing countries the case of greece abstract this paper investigates some aspects of the interrelated paths of economic growth and energy demand in the case of an industrializing economy through the use of numerous econometric models translog functions have helped establish that income and price elasticities of energy two critical parameters in the energy economy interaction exhibit falling trends with time the value share of the industrial sector is strongly associated with both energy demand and energy intensity any increase in the former will lead to amplified increases in the latter rendering the continuation of past trends in industrial expansion questionable under conditions of high energy costs substitution among capital labour and energy does take place though to a limited extent as indicated by the aggregate measure of energy non energy substitution elasticity all findings appear to suggest that energy policymaking in an industrializing country like greece will be of low effectiveness until certain structural changes in the economy are realized

long run marginal cost pricing based on analytical method for revenue reconciliation incremental and marginal approaches are two different types of methods to price the use of networks the major difference between them is in the way they evaluate the costs imposed by network users the former calculates network charges through simulation and the latter derives charges with a sensitivity based analytical approach both charging models aim to send cost reflective economic signals to customers providing an economic climate for the cost effective development of networks in this paper a novel long run marginal cost lrmc pricing methodology based on analytical method is proposed to reflect the impacts on the long run costs imposed by a nodal injection through sensitivity analysis the sensitivity analysis consists of three partial differentiations 1 the sensitivity of circuit power flow with respect to nodal power increment 2 the sensitivity of the time to reinforce network with respect to changes in circuit power flows and 3 the sensitivity of present value of future reinforcement with respect to changes in time to reinforce two test systems are employed to illustrate the principles and implementation of the proposed method results from incremental and marginal approaches under different system conditions are compared and contrasted in terms of charges and tariffs the proposed method as demonstrated in the test systems can produce forward looking charges that reflect the extent of network utilization levels in addition to the distance that power must travel from points of generation to points of consumption furthermore the proposed method is able to provide further insights into factors influencing network charges

an analysis of the marginal value of electricity transmission lines in the dispatch possible applications the marginal value of transmission lines in the dispatch is widely used in the literature and has relevant practical applications related to planning the expansion of the transmission grid and computing the remuneration of merchant lines this paper presents a general formulation of the marginal value of a line in the dispatch that highlights the dependence of this value on the link between line admittance and capacity we discuss the value of a line according to marginal principles following a general approach and prove that only if the admittance of a line can be expressed as a linear function of its capacity or when admittance and capacity can be deemed independent is this value equal to the product of the difference between marginal electricity prices at both ends of the line and the flow through this line afterwards we show that under a set of stylized conditions the remuneration of efficient network investments according to their marginal value in the dispatch should result in an exact recovery of their cost finally we compute the marginal value of lines in a stylized though representative system for several relationships between line capacities and admittances to illustrate the theoretical results obtained

knowledge based approaches to the theory of the firm some critical comments it is argued that kogut and zander kogut b u zander 1992 knowledge of the firm combinative capabilities and the replication of technology organ sci 3 383 397 and conner conner k r 1991 a historical comparison of resource based theory and five schools of thought within industrial organization economics do we have a new theory of the firm j management 17 121 154 erred in the specific way in which they claimed that a distinct theory of the multi person firm can be constructed on the basis of a theory of organizational knowledge or from resource based insights it is not possible to tell very much of a story about why there should be firms in lieu of notions such as opportunism or moral hazard however properly interpreted knowledge based theories may help shed light on issues relating to the boundaries and internal organization of the firm

from internationalization to evolution the uppsala model at 40 years abstract the original uppsala model that was published in 1977 explains the internationalization process of firms we have further developed the model several times in the intervening years the present article is our latest effort a general model of the evolution of the multinational business enterprise mbe from early steps abroad to being a global firm the updated augmented model explains mbe evolution in general not only characteristics of the internationalization process in a narrow sense we believe that the newest iteration anchored in process ontology will be useful in conducting longitudinal empirical studies

estimating the demand for gasoline in developing countries senegal abstract this paper estimates the aggregate demand for gasoline in senegal from 1970 to 2008 the long term and short term elasticities of demand with respect to gasoline prices and income are of paramount interest in this study in senegal rising food prices unemployment and shortage of electric supply are always associated with the spiking cost of world oil prices to understand the external shocks of world oil price and demand for gasoline in senegal this study tested a log linear model against the linear model of the demand for oil function with lagged dependent variables as an explanatory variable here the linear specification of the demand for oil is rejected in this study in favor of the log linear the natural log transformation is typical when using high frequency data and significantly reduces skewness and kurtosis generally in this study i found that short run elasticity is smaller than long run elasticity and gasoline demand is inelastic with respect to both price and income for both the short and long runs in senegal this is why researcher like moosa posits that this assertion can be rationalised on the grounds that oil is such an important commodity that does not have close substitutes at least for its uses 1998 p 3

solving the revenue reconciliation problem of distribution network providers using long term marginal prices in this paper the authors describe an integrated methodology to compute long term marginal prices in distribution networks long term marginal prices are considered the most interesting and economically sound way of allocating network costs to users additionally they inherently deal with the revenue reconciliation problem as they generally do not require other large supplementary tariff terms the proposed methodology uses fuzzy sets to model uncertainties in load forecasts and considers several criteria to guide the identification of solutions at the end there is a final decision making step to select the most adequate expansion plan according to the preferences of the decision maker

multiculturalism from a cognitive perspective patterns and implications multiculturalism the internal representation of multiple cultural meaning systems has critical implications for global managers and multinational corporations mncs understanding multiculturalism is becoming increasingly important given that the locations within which mnc activity resides and the composition of the workforce even within a given location are more diverse building on the connectionism perspective we offer a novel cognitive conceptualization of multiculturalism that incorporates the individual s multicultural cognitive content and structure based on that we explain how specific sociocultural experiences interact with existing individual cognitions to form different patterns of multiculturalism specifically we propose five stylized patterns compartmentalization integration inclusion convergence and generalization and explain how they are developed through specific sociocultural experiences we discuss how different patterns of multiculturalism influence specific capabilities of multicultural mnc managers and their effectiveness in a variety of critical mnc tasks we believe the cognitive connectionist perspective which has not been brought before into international business discussions of culture and cultural capabilities holds great promise for better understanding global managers capabilities and development

transmission use of system charges under future gb power system scenarios if transmission charges are to reflect costs they should be affected by the location of demand and generation this paper describes the investment cost related pricing icrp methodology used to calculate transmission charges in great britain gb which is based on the marginal investment cost of additional demand or generation using a dc load flow transport model we apply this existing method to calculate charges for the supergen futurenet scenarios for 2020 this study highlights the sensitivities in charges for use of the transmission system arising from plausible demand and generation developments the changes in tariffs will present financial challenges for system users in some areas the objective of the work presented is to illustrate the sensitivity of the charges produced by this methodology to changes in demand generation and network topology rather than compare alternative pricing approaches the conclusion drawn is that the icrp system pricing method may be suitable in future years but only with some important issues investigated and resolved

welfare effects of price discrimination by a regulated monopolist should a multiproduct monopolist whose average price is capped by regulation be allowed to engage in third degree price discrimination if the cap applies to a price index with weights proportional to demands at uniform prices then price discrimination benefits consumers as well as the firm but if perhaps more realistically it is the firm s average revenue that is capped then consumers prefer uniform pricing in this case total output is higher when discrimination is allowed which increases welfare but marginal utilities differ across markets which is inefficient and the overall effect is ambiguous a small amount of discrimination is desirable however it is better not to allow price discrimination if the price cap is close to the level of marginal cost the consequences of tightening the price cap when discrimination is allowed are also examined

the end of the opportunism vs trust debate bounded reliability as a new envelope concept in research on mne governance modern transaction cost economics tce thinking has developed into a key intellectual foundation of international business ib research but the williamsonian version has faced substantial criticism for adopting the behavioral assumption of opportunism in this paper we assess both the opportunism concept and existing alternatives such as trust within the context of ib research especially work on multinational enterprise mne governance case analyses of nine global mnes illustrate an alternative to the opportunism assumption that captures more fully the mechanisms underlying failed commitments inside the mne as a substitute for the often criticized assumption of opportunism we propose the envelope concept of bounded reliability brel an assumption that represents more accurately and more completely the reasons for failed commitments without invalidating the other critical assumption in conventional tce and internalization theory thinking namely the widely accepted envelope concept of bounded rationality brat bounded reliability as an envelope concept includes two main components within the context of global mne management opportunism as intentional deceit and benevolent preference reversal the implications for ib research of adopting the bounded reliability concept are far reaching as this concept may increase the legitimacy of comparative institutional analysis in the social sciences

transmission investment in the peruvian electricity market theory and applications abstract this research presents an application of the mechanism in hogan et al 2010 hrv to promote electricity transmission network expansion in the peruvian electricity transmission system known as sein sistema electrico interconectado nacional the hrv mechanism combines the merchant and regulatory approaches to promote investment into transmission grids this mechanism gives incentives for efficient investment in expansion of the network by rebalancing over time the fixed and variable charges of a two part tariff in the framework of a wholesale electricity market with locational pricing the expansion of the network is carried out through the sale of financial transmission rights ftrs for the congested lines the mechanism is applied for 103 nodes of the sein using detailed characteristics of generators nodes and transmission lines under laspeyres weights and linear cost of expansion of transmission capacity it is shown that prices converge to lower price levels as a result of increased transmission capacity

coordination of generation and transmission development through generation transmission charges a game theoretical approach transmission charges aim to recover the cost of transmission network investments and provide efficient locational signals to new generators in this paper we investigate the effect of these charges on the development of new generation capacities in the system generation expansion planning is decided by strategic generation planners sgps trying to maximize their profits while transmission line investments are planned by a central planner and regulatory body aimed at minimizing the overall operation and network investment costs of the system regulatory transmission charges rtcs are calculated according to the marginal responsibility of generation investment on transmission network investment costs an iterative algorithm is proposed to model the interaction taking place between the central planner and sgps the developed methodology is applied to a 2 node illustrative example and the ieee rts96 and effects of rtcs on investment decisions of sgps are analyzed