A fair and stable benefit-sharing for the Northeast Asia Supergrid under flexible networks

Hee-In Chang, Youngsub Chun and Yunji Her

Energy Economics, 2021, vol. 103, issue C

Abstract: Among five countries in the Northeast Asia (NEA), China, Japan, Mongolia, Russia, and South Korea, there has been a long discussion on the construction of the NEA Supergrid to optimize the use of energy resources. In this paper, we study whether the NEA Supergrid plan in 2030 is beneficial to five countries and if so, how to allocate its benefit to each country in a fair and stable way. By formulating various scenarios on the transmission capacity and the maximum amount of imported power by each country, we search for the optimal network structure when the total benefit is allocated by using the Myerson (1977) value. First, we show that the Myerson value allocation for the 2030 plan satisfies core stability so that no subgroup of countries have incentives to leave the plan. However, it does not satisfy pairwise stability, so that some countries have incentives to modify the network structure. In fact, China and Japan can be better off by adding a new transmission line between them. If this line is added to the plan, then the Myerson value allocation becomes both core stable and pairwise stable. A similar result is obtained for the nucleolus (Schmeidler, 1969).

Keywords: Northeast Asia Supergrid; Benefit-sharing; Myerson value; Nucleolus; Core stability; Pairwise stability (search for similar items in EconPapers)
JEL-codes: C71 D63 D70 F15 Q40 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:103:y:2021:i:c:s0140988321004011

DOI: 10.1016/j.eneco.2021.105521

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