Bargaining Power and Value Sharing in Distribution Networks: A Cooperative Game Theory Approach
Roberto Roson () and
Networks and Spatial Economics, 2015, vol. 15, issue 1, 71-87
This paper introduces a novel methodology for analyzing bargaining games on network markets, which are markets where transactions occur by means of distribution networks (e.g., gas, electric energy, water, etc.). The overall economic surplus obtained in the market is distributed among all network agents the on the basis of their bargaining power, which in turn depends on a variety of factors: position of each agent (e.g., a country) in the network, reliability in the cooperation scheme (e.g., geo-political stability), existence of market distortions and availability of outside options (e.g., alternative energy sources). The method we propose, which is illustrated here through an application to a fictitious network structure, is based on a two-stage process: first, a network optimization model is used to generate payoff values under different coalitions and network structures; second, cooperative game solutions are identified. Any change in the network structure entails both a variation in the overall welfare level and in the distribution of surplus among agents, as it affects their relative bargaining power. Therefore, expected costs and benefits, at the aggregate as well as at the individual level, can be compared to assess the economic viability of any investment in network infrastructure. A number of model variants and extensions are also considered: changing demand, exogenous instability factors, market distortions, externalities and outside options. Copyright Springer Science+Business Media New York 2015
Keywords: Network markets; Cooperative games; Distribution networks; Bargaining (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
Working Paper: Bargaining Power and Value Sharing in Distribution Networks: A Cooperative Game Theory Approach (2014)
Working Paper: Bargaining Power and Value Sharing in Distribution Networks: a Cooperative Game Theory Approach (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:netspa:v:15:y:2015:i:1:p:71-87
Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11067/PS2
Access Statistics for this article
Networks and Spatial Economics is currently edited by Terry L. Friesz
More articles in Networks and Spatial Economics from Springer
Bibliographic data for series maintained by Sonal Shukla ().