the electricity generation adequacy problem assessing dynamic effects of capacity remuneration mechanisms abstract following liberalization reforms the ability of power markets to provide satisfactory incentives for capacity investments has become a major concern in particular current energy markets can exhibit a phenomenon of investment cycles which generate phases of under and over capacity and hence additional costs and risks for generation adequacy to cope with these issues new mechanisms called capacity remuneration mechanisms crm have been or will be implemented this paper assesses the dynamic effects of two crms the capacity market and the strategic reserve mechanism and studies to what extent they can reduce the investment cycles generation costs and shortage costs of both mechanisms are also compared to conclude on their effectivity and economic efficiency a simulation model based on system dynamics is developed to study the functioning of both crms and the related investment decisions the results highlight the benefits of deploying crms to solve the adequacy issue shortages are strongly reduced compared to an energy only market besides the capacity market appears to be more beneficial since it experiences fewer shortages and generation costs are lower these comparisons can be used by policy makers in particular in europe where these two crms are mainly debated to determine which crm to adopt

hierarchical organization and incentives abstract we study decentralization in public decision making as the possibility for local authorities to sign incentive contracts with local agents in a context of asymmetric information we first review some theoretical arguments put forward for the optimality of decentralized structures we then present a model of organization of incentive policy in the eu context where national authorities have better information on their agents but less bargaining power than central authorities at the community level we show the complementarities between both levels of regulation

auction approaches of long term contracts to ensure generation investment in electricity markets lessons from the brazilian and chilean experiences the implementation of auctions of long term electricity contracts is arising as an alternative to ensure generation investment and therefore achieve a reliable electricity supply the aim is to reconcile generation adequacy with efficient energy purchase correct risk allocation among investors and consumers and the politico economic environment of the country in this paper a generic proposal for a long term electricity contracts approach is made including practical design concepts for implementation this proposal is empirically derived from the auctions implemented in brazil and chile during the last 6 years the study is focused on practices and lessons which are especially useful for regulators and policy makers that want to facilitate the financing of new desirable power plants in risky environments and also efficiently allocate supply contracts among investors at competitive prices although this mechanism is generally seen as a significant improvement in market regulation there are questions and concerns on auction performance that require careful design and which are identified in this paper in addition the experiences and proposal described can serve to derive further mechanisms in order to promote the entrance of particular generation technologies e g renewables in the developed world and therefore achieve a clean electricity supply

the optimal performance of the global firm formalizing and extending the integration responsiveness framework with the increasing globalization of business there has been growing interest in how to create and manage a successful international enterprise although researchers and practitioners have grappled with the issue of globalization for some time there is no one model that encompasses the range of phenomena we observe in the global economy nor have those models that do exist been precisely formalized this paper provides an expanded approach to thinking about the organizational forms and linkages that exist in international business operations building on the popular integrationresponsiveness framework of international strategic orientation we develop a more expansive approach that is better able to account for the diversity of organizational forms and strategic choices open to managers by adding a third set of environmental pressures incorporating the beliefs of managers and by employing the idea of efficient frontiers we reformulate the integration responsiveness framework making it more consistent with modern economic models of the firm our integration responsiveness completeness irc model argues that global firms can respond to these fundamental and competing pressures by configuring themselves in a variety of ways rather than normatively prescribing that the transnational form is optimal in addition our model has methodological ramifications its formal structure suggests that empirical techniques that focus on the best rather than average performance are necessary to adequately investigate the performance differences among alternative organizational forms this may explain the paradoxical lack of empirical support for a link between organizational form and performance

globalisation economic geography and the strategy of multinational enterprises the intention of this paper is to review the literature linking ownership and location strategies to economic geography and theories of globalisation and to explore new areas of research this paper examines globalisation in terms of conflicts between markets and economic management and suggests that the differential pace of globalisation across markets presents a number of challenges to policy makers in local national and regional governments and in international institutions in examining the changing location and ownership strategies of mnes it shows that the increasingly sophisticated decision making of managers in mnes is slicing the activities of firms more finely and in finding optimum locations for each closely defined activity they are deepening the international division of labour ownership strategies too are becoming increasingly complex leading to a control matrix that runs from wholly owned units via fdi through market relationships such as subcontracting including joint ventures as options on subsequent decisions in a dynamic pattern the input of lessons from economic geography is thus becoming more important in understanding the key developments in international business the consequences of the globalisation of production and consumption represent political challenges and reaction against these changes has led to a questioning of the effects of global capitalism as well as to its moral basis these four issues are closely intertwined and present a formidable research agenda to which the international business research community is uniquely fitted to respond

modeling long term dynamics of electricity markets in the last decade many countries have restructured their electricity industries by introducing competition in their power generation sectors although some restructuring has been regarded as successful the short experience accumulated with liberalized power markets does not allow making any founded assertion about their long term behavior long term prices and long term supply reliability are now center of interest this concerns firms considering investments in generation capacity and regulatory authorities interested in assuring the long term supply adequacy and the stability of power markets in order to gain significant insight into the long term behavior of liberalized power markets in this paper a simulation model based on system dynamics is proposed and the underlying mathematical formulations extensively discussed unlike classical market models based on the assumption that market outcomes replicate the results of a centrally made optimization the approach presented here focuses on replicating the system structure of power markets and the logic of relationships among system components in order to derive its dynamical response the simulations suggest that there might be serious problems to adjust early enough the generation capacity necessary to maintain stable reserve margins and consequently stable long term price levels because of feedback loops embedded in the structure of power markets and the existence of some time lags the long term market development might exhibit a quite volatile behavior by varying some exogenous inputs a sensitivity analysis is carried out to assess the influence of these factors on the long run market dynamics

analyzing foreign market entry strategies extending the internalization approach a new fully integrated analysis of the foreign market entry decision is presented encompassing the choice between exporting licensing joint venturing and wholly owned foreign investment the choice between acquisition and greenfield investment is examined and so too are options based on subcontracting and franchising the model extends the insights of internalization theory and draws on concepts from the economics of industrial organization a special feature of the model is the distinction between investment in production facilities and investment in distribution facilities an important practical distinction that has been overlooked in much of the international business literature the strength of competition from indigenous rivals is emphasized as a determinant of entry strategy into both production and distribution

dynamic modeling of thermal generation capacity investment application to markets with high wind penetration modeling the dynamics of merchant generation investment in market environments can inform the making of policies whose goals are to promote investment in renewable generation while maintaining security of supply such models need to calculate expected output costs and revenue of thermal generation subject to varying load and random generator outages in a power system with high penetrations of wind this paper presents a dynamic investment simulation model where the short term energy market is simulated using probabilistic production costing using the mix of normals distribution mond technique to represent residual load load net of wind output price mark ups due to market power are accounted for an energy only market setting is used to estimate the economic profitability of investments and forecast the evolution of security of supply simulated results for a great britain gb market case study show a pattern of increased relative security of supply risk during the 2020s in addition many new investments can recover their fixed costs only during years in which more frequent supply shortages push energy prices higher

decentralization duplication and delay we argue that although decentralization has advantages in finding low cost solutions these advantages are accompanied by coordination problems which lead to delay or duplication of effort or both consequently decentralization is desirable when there is little urgency or a great deal of private information but it is strictly undesirable in urgent problems when private information is less important we also examine the effect of large numbers and find that coordination problems disappear in the limit if distributions are common knowledge

central governance or subsidiarity a property rights approach to federalism abstract we consider a model where one region in a federation can realize a public project after undertaking value increasing investments while negotiations on the federal level ensure that an efficient project size is implemented in equilibrium non contractibility of investments causes the overall outcome to differ across regimes if the region bears the entire implementation costs of its policies underinvestment prevails and subsidiarity centralized governance is superior when spillovers are weak strong conversely if linear cost sharing arrangements are feasible decentralized authority often admits a socially optimal outcome while centralized authority with majority or unanimity rule does not

reappraising the eclectic paradigm in an age of alliance capitalism this article discusses the implications of the advent of alliance capitalism for our theorizing about the determinants of mne activity in particular it argues that due to the increasing porosity of the boundaries of firms countries and markets the eclectic or oli paradigm of international production needs to consider more explicitly the competitive advantages arising from the way firms organize their inter firm transactions the growing interdependencies of many intermediate product markets and the widening of the portfolio of the assets of districts regions and countries to embrace the external economies of interdependent activities

real options approach based demand forecasting method for a range of products with highly volatile and correlated demand to achieve a competitive edge needed for marketing highly competitive products modern enterprises have actively sought to provide the marketplace with an expansive range of products with high random volatility of demand and correlations between demands of product consequently traditional forecasting methods for separately forecasting demand for these products are likely to yield significant deviations therefore this study develops a real options approach based forecasting model to accurately predict future demand for a given range of products with highly volatile and correlated demand additionally this study also proposes using monte carlo simulation to solve the demand forecasting model the real options approach associated with monte carlo simulation not only deals effectively with random variation involving a particular demand stochastic diffusion process but can handle the correlations in product demand

the impact of investors risk aversion on the performances of capacity remuneration mechanisms abstract this paper analyses the impact of risk aversion on the performances of capacity remuneration mechanisms with investors facing an uncertain peak load three market designs are studied for this purpose a competitive energy only market a capacity market and a strategic reserve mechanism a simulation model based on system dynamics is developed in order to represent investment decisions and analyse the behaviour of each market design risk aversion is modelled through the computation of conditional value at risk the results are discussed in terms of impact on the reliability ability to limit shortages and cost total generation costs of the studied market designs when comparing the three market designs the capacity market seems to be the least affected by the introduction of risk aversion both in terms of cost and reliability this result suggests that implementing a capacity market is preferable in order to deal with the adverse effects of risk aversion given the simulations and parameters that were used

cycles in deregulated electricity markets empirical evidence from two decades abstract in this article we discuss the cycle hypothesis in electricity generation which states that the introduction of deregulation in an electricity system might lead to sustained fluctuations of over and under capacity the occurrence of cycles is one of the major threats for electricity markets as it affects the security of supply and creates uncertainty in both the profitability of electricity companies and in consumer prices we discuss the background for these cycles using analogies with other capital intensive industries along with evidence from the analysis of behavioral simulation models as well as from experimental electricity markets using data from the oldest deregulated markets we find support for the hypothesis in the case of the english and chilean markets based on an autocorrelation analysis evidence from the nordpool market is more ambiguous although we might be observing the first half of a cycle in generation capacity comparing a simulation of the english market performed in 1992 with the actual performance we can observe that the qualitative behavior of the model is consistent with the actual evolution finally we discuss possible mechanisms for damping cycles in electricity generation such as mothballing capacity payments and reliability markets

is the international business research agenda running out of steam this research note challenges international business researchers to think of their future work in terms of the past achievements of their discipline it identifies three key research areas corresponding to attempts to tackle crucial empirical questions the explanation of foreign direct investment the multinational firm and the globalization of business it ends by considering the future research agenda

sensitivity of reserve margin to factors influencing investment behaviour in the electricity market of england and wales abstract the electricity generation and distribution industries of england and wales have recently undergone major re structuring as part of the privatization process of taking them out of the public sector on the generation side three major companies have been created which compete both with each other and with the new independent companies who are expected to enter the market trading between generators and distributors is controlled centrally by a pool system which attempts to ensure the optimal operation of the system in the short term and gives a pricing signal for longer term investment this pricing signal depends upon an a priori loss of load probability this paper is intended to provide insights into how the investment in capacity for generation could evolve according to various regulatory conditions economic assumptions degrees of competition and the strategic behaviour of the separate companies using a system dynamics approach a simulation model of investment is developed to generate insights into the volatility of the reserve margin variations in the loss of load probability and the various market share scenarios the degree of uncertainty in the demand the amount of information exchange between competitors and the degree of foresight in planning are considered as well as different financial or market share objectives for companies

from nuclear phase out to renewable energies in the swiss electricity market abstract liberalisation and the ever larger share of variable renewable energies vres e g photovoltaic pv and wind energy affect security of supply sos we develop a system dynamics model to analyse the impact of vres on the investment decision process and to understand how sos is affected we focus on the swiss electricity market which is currently undergoing a liberalisation process and simultaneously faces the encouragement of vres and a nuclear phase out our results show that nuclear production is replaced mainly by pv and imports the country becomes a net importer this evolution points to a problem of capacity adequacy the resulting price rise together with the subsidies needed to support vres lead to a rise in tariffs in the presence of a high share of hydro the de rated margin may give a misleading picture of the capacity adequacy we thus propose a new metric the annual energy margin which considers the energy available from all sources while acknowledging that hydro storage can function as a battery this measure shows a much less reassuring picture of the country s capacity adequacy

a critical assessment of the different approaches aimed to secure electricity generation supply abstract since the very beginning of the power systems reform process one of the key questions posed has been whether the market of its own accord is able to provide satisfactory security of supply at the power generation level or if some additional regulatory mechanism needs to be introduced and in the latter case which is the most suitable approach to tackle the problem this matter is undoubtedly gaining importance and it has taken a key role in the energy regulators agendas in this paper we critically review and categorize the different approaches regulators can opt for to deal with the problem of guaranteeing or at least enhancing security of supply in a market oriented environment we analyze the most relevant regulatory design elements throughout an updated assessment of the broad range of international experiences highlighting the lessons we have learned so far in a variety of contexts based on the analysis we conclude by providing a set of principles and criteria that should be considered by the regulator when designing a security of supply mechanism

the firm as a communication network this paper analyzes how organizations can minimize costs of processing and communicating information communication is costly because it takes time for an agent to absorb new information sent by others agents can reduce this time by specializing in the processing of particular types of information when these returns to specialization outweigh costs of communication it is efficient for several agents to collaborate within a firm it is shown that efficient networks involve centralization that individuals delegate tasks to subordinates only if they are overloaded and that the number of transits to the top tends to be equalized across individual information items

the missing link in budget models of nonprofit institutions two practical dutch applications the dutch government health insurance associations and research boards allocate budgets to nonprofit institutions hospitals universities based on general indicators inhabitants admissions or students with these budgets the top management of each institution the principal allocates the funds using general indicators to distribute the money further down to the base at the base of the nonprofit institutions the professionals the agents perform a spectrum of specific tasks tension around the budgetting process exists between top management and professionals this paper resolves the tension along the research lines of burton and obel 1995 by measuring in money terms the specific tasks of the professionals of universities and hospitals at the base and by reconsidering the theoretical background of the internal budget system the study also develops the missing link in an integral external and internal budget system by integrating the managerial and professional decisions or the input output decisions in one approach

capacity adequacy in power markets facing energy transition a comparison of scarcity pricing and capacity mechanism this article analyses how a capacity mechanism can address security of supply objectives in a power market undergoing an energy transition that combines energy efficiency efforts to stabilise demand and a rapid increase in the proportion of renewables to analyse this situation power markets are simulated over the long term with a system dynamics model integrating new investment and closure decisions this last trait is relevant to studying investment in power generation in mature markets undergoing policy shocks the energy only market design with a price cap with and without a capacity mechanism is compared to scarcity pricing in two investment behaviour scenarios with and without risk aversion the results show that the three market designs lead to different levels of risk for peaking unit investment and results thus differ according to which risk aversion hypothesis is adopted assuming a risk neutral investor the results indicate that compared to an energy only market with a price cap at 3 000 mwh an energy only market with scarcity pricing and the market design with a capacity mechanism are two efficient options to reach similar levels of load loss but under the hypothesis of risk aversion the results highlight the advantage of the capacity mechanism over scarcity pricing

the state as strategist in international business research no matter what strategy managers choose cross national differences in states strategic capabilities and objectives affect multinational corporations capabilities to manage interdependent operations in this paper we develop four attribute dimensions along which states strategic economic capabilities vary we then apply these dimensions to show how they contribute to familiar international business models of managerial process mnc strategy and organizational structure and country competitiveness

characteristics of foreign subsidiaries in industry clusters this paper examines the characteristics of foreign owned subsidiaries in export intensive leading edge industry clusters as defined by porter 1990 using a sample of 229 subsidiaries from three countries we show that subsidiaries in such clusters are more embedded more autonomous and more internationally oriented than subsidiaries in other industry sectors we also show that there are significant differences in the roles of foreign owned subsidiaries from one leading edge cluster to the next that are associated with the dynamism of the cluster and the overall level of foreign ownership the results indicate 1 that typologies of subsidiary roles should give increased consideration to environmental factors and 2 that thinking on industry clusters instead of treating them identically should recognize that they have heterogeneous characteristics

global mind sets and cognitive shift in a complex multinational corporation this article investigates attitudes that underlie international strategy processes we propose survey scales of these attitudes and describe tests that support their reliability and validity as measures of constructs including integration responsiveness and coordination that researchers have used for many years in case analyses of international strategy and organization we also propose and validate scales to capture the perceived alignment with firms international objectives of key business policies that affect individuals including accountability for global results career opportunity and a globally shared meaning system that informs communication and discussion about change our discussion of these tests offers an assessment of how changing patterns of association among the measures over time conform to expectations generated by the case based empirical literature we argue that these patterns document a process of organizational learning that can link managers mind sets with senior managers intentions in the course of proactive international strategic change the analysis relies on survey responses taken in 1992 and 1995 from 370 managers in 13 country affiliates and the head office of a u s based diversified multinational corporation dmnc 1998 john wiley sons ltd

introduction to the symposium multinationals the janus face of globalization panning the globe its af liates andstrategic partnerships linking coun tries in complex webs of alliances themultinational enterprise mne is theembodiment of globalization and itsprincipal agent nation states have con tributed towards making the mne thekey agent of globalization through pro moting technological innovation reduc ing tariff and non tariff barriers and lib eralizing their domestic nancial sys tems multinationals have been theprime movers behind globalization tak ing advantage of the increased opennessof domestic economies to integrate theiractivities across national markets and so cieties given their mobility and visibility itis not surprising that mnes have becomea lightning rod for groups concernedabout the various costs of globalization social cultural political and perhapsmost importantly the economic costs although international business ib scholars and policymakers emphasizethe bene ts of globalization and cooper ative relations with mnes the publicand non governmental organizationshave ignored these views and focused onthe dark side of mne state relations with the growing backlash against glob alization and mnes more research onthe janus face of globalization is neededif the pro mne pro globalization viewsof most ib scholars are to prevail in pub lic policy debates this research symposium served as aninvitation to international businessscholars to further explore the janus faceof globalization through organizing thissymposium we have come to appreciatethat when scholars look at problemsidenti ed with globalization s dark side they also often contribute to our under standing of the bright side the potentialfor globalization to bring with it wide spread bene ts for all we submit that asscholars we can learn more when we tryto ferret out the causal relationships be tween globalization the mne the state

the multiprincipal nature of government abstract one of the theoretical tools required to open the black box of the government organization is the theory of multiprincipals which describes how different incentive mechanisms compete with each others in viewing the set of relationships between several government bodies and the entities they regulate as a set of competing contracts in which the control of the regulatory process is shared amongst these different regulators we can address the question of the costs and the possible benefits of such structural separation first this paper surveys the previous literature on the topic then it traces out the possible benefits of such structures to the non benevolence of regulators we discuss also how regulatory rights of control and communication channels must be designed all together to deal with this problem

fiscal decentralization and intergovernmental fiscal relations a cross country analysis abstract fiscal decentralization consists primarily of devolving revenue sources and expenditure functions to lower tiers of government by bringing the government closer to the people fiscal decentralization is expected to boost public sector efficiency as well as accountability and transparency in service delivery and policy making decentralization also entails greater complexity in intergovernmental fiscal relations and coordination failures in fiscal relations are likely to have a bearing on fiscal positions nationally and subnationally evidence provided in this paper for a sample of 30 countries suggests that coordination failures in intergovernmental fiscal relations are likely to result in a deficit bias in decentralized policy making particularly in the case of developing countries which may not meet important requirements for successful decentralization

a dynamic simulation model for assessing the overall impact of incentive policies on power system reliability costs and environment abstract the liberalization of power markets has entailed dramatic changes in power system planning worldwide the inception of new alternative technologies smart grids and distributed generation and storage is expected to make system planning even more challenging government policies still play a major role in the evolution of a country s power generation mix even in those countries with liberalized markets this paper presents a system dynamics model aimed at assessing the overall technical economic and environmental impact of renewable energy incentives and capacity payment policies the model has been used to simulate spain s power industry in order to assess the impact of electric power policies with the goal of getting insights regarding how to achieve an optimum power generation mix the main conclusions of the present paper are i the necessity of specific regulatory actions in spain in order to keep adequate reliability levels avoid price spikes and boom and bust investment cycles as well as to deploy specific technologies ii the fact that capacity payments are a better instrument for keeping adequate reserve margins and avoiding power price spikes than renewable energy incentives and iii the evidence that both instruments entail additional system costs over the base case scenario

reliability payments to generation capacity in electricity markets abstract electric power is a critical input to modern economies generation adequacy and security of supply in power systems running under competition are currently topics of high concern for consumers regulators and governments in a market setting generation investments and adequacy can only be achieved by an appropriate regulatory framework that sets efficient remuneration to power capacity theoretically energy only electricity markets are efficient and no additional mechanism is needed nonetheless the energy only market design suffers from serious drawbacks therefore jointly with the evolution of electricity markets many remunerating mechanisms for generation capacity have been proposed explicit capacity payment was the first remunerating approach implemented and perhaps still the most applied however this price based regulation has been applied no without severe difficulties and criticism in this paper a new reliability payment mechanism is envisioned capacity of each generating unit is paid according to its effective contribution to overall system reliability the proposed scheme has many attractive features and preserves the theoretical efficiency properties of energy only markets fairness incentive compatibility market power mitigation and settlement rules are investigated in this work the article also examines the requirements for system data and models in order to implement the proposed capacity mechanism a numerical example on a real hydrothermal system serves for illustrating the practicability of the proposed approach and the resulting reliability payments to the generation units

long term assessment of power capacity incentives by modeling generation investment dynamics under irreversibility and uncertainty abstract in actual energy only markets the high volatility of power prices affects the expected returns of generators when dealing with irreversibility under uncertainty deferring decisions to commit in new power plants waiting for better information is therefore a rational approach theoretical and empirical evidence suggests that such investment pattern determines the occurrence of construction cycles which strongly compromise supply security in order to supplement generators revenues several remuneration mechanisms have been devised over past years along this line this work addresses the long run dynamics of capacity adequacy and market efficiency with both a price based and a quantity based capacity remuneration policy for that purpose a recently developed stochastic simulation model is used as a benchmark hence the optimal postponement of generation investment decisions is integrated into a long run power market model by formulating the decision making problem in the framework of real options analysis results suggest that policymakers may exchange supply security effectiveness for energy prices to be paid by consumers efficiency when designing and implementing capacity remuneration mechanisms by doing so this article contributes to the ongoing debate regarding the design of incentive policies and efficient power markets by considering the microeconomics of investors decision making under irreversibility and uncertainty

an improved mechanism for capacity payment based on system dynamics modeling for investment planning in competitive electricity environment many countries have experienced restructuring in their electric utilities this restructuring has presented the power industries with new challenges the most important of which is long term investment planning under uncertain conditions this paper presents an improved mechanism for capacity payment the mechanism has been investigated based on system dynamic modeling in our proposed mechanism generators will recover a part of their investment through capacity payment while the payment for any plant remains constant during the operation period it depends on the investment needed to build it the main factors affecting long term planning have been considered in our model the approach can be used to investigate the effects of fixed as well as variable capacity payment in market investment we used the probability density function of load as a new concept to calculate average market price delays in unit constructions estimation of demand and market capacity growth during construction periods have been included in the proposed algorithm as parameters which affect the regulator s decision for changing capacity payment the model can be used by regulators to investigate strategies that may affect the fluctuations in the market

an economic model of international joint venture strategy the strategic choice between joint ventures licensing agreements and mergers is analysed using eight key factors suggested by internalisation theory the model explains the increasing role of international joint ventures in the 1980s in terms of the accelerating pace of technological innovation and the globalisation of markets it offers a range of predictions about the formation of joint ventures within industries across industries across locations and over time it exploits a powerful modelling technique that has many other applications in international business strategy

arm s length relationships we show that lowering the cost of acquisition of information that a principal obtains about the performance of an agent may make it more difficult for the principal to commit to threats hence it will weaken incentives and can therefore be counterproductive this phenomenon is explored in a framework where improving the quality of information makes a commitment not to renegotiate less credible applications to the theory of the firm are briefly explored

dynamic analysis of various investment incentives and regional capacity assignment in iranian electricity market this paper develops a system dynamics model to analyze the impacts of different kinds of capacity payment as investment incentive mechanisms in iranian electricity market since it is aimed that the incurred capital and operating costs of generation technologies be recovered in iranian electricity pool the noncompetitive capacity payment mechanism has been introduced for this purpose in order to encourage new investments in electric power generation system in the current mechanism the capacity payments are designated to the generating units in the whole country electricity market an annual base value of capacity payment is proposed based on recovering the capital cost of a benchmark generation technology this value is altered according to the operational reserve in the day ahead electricity market this supporting policy is simulated and analyzed in the proposed dynamic framework in order to track the trend of new investments in the iranian electricity market the feasibility study of implementing the regional capacity assignment is the main focus of this paper different possible regulating policies such as floating rates for capacity payment and electricity price cap the multiple capacity payments to various technologies and the regional electricity market with territorial capacity allocation are examined in order to investigate the consequences and performances of different decisions and policies in the capacity investment of iranian electricity market