Optimal regulation of energy network expansion when costs are stochastic
| Autor: | Gijsbert Zwart |
|---|---|
| Přispěvatelé: | Research programme EEF |
| Rok vydání: | 2021 |
| Předmět: |
Economics and Econometrics
050208 finance Control and Optimization Operations research Applied Mathematics 05 social sciences Adverse selection Principal–agent problem Context (language use) Energy transition Investment (macroeconomics) Information asymmetry 0502 economics and business Agency (sociology) Economics 050207 economics Energy (signal processing) |
| Zdroj: | Journal of Economic Dynamics and Control, 126:103945. Elsevier |
| ISSN: | 0165-1889 |
| DOI: | 10.1016/j.jedc.2020.103945 |
| Popis: | We analyze optimal regulation of the gradual investments in energy networks necessary to accommodate the energy transition. We focus on a real option problem where costs of new network technology are stochastic and not observable to the regulator. We solve for the regulatory scheme that optimally balances timely investments with rent extraction in this dynamic agency context. We then apply this methodology to a situation in which investment can be either in traditional network technology, with observable costs, or using an innovative network technology for which there is asymmetric information on costs. The optimal choice trades off the potential benefits of cheaper expansion with the costs of overcoming information frictions. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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