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A cooperative game theoretic approach on the stability of the ASEAN power grid

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  • Her, Yunji
  • Chang, Youngho
  • Chun, Youngsub
  • Li, Yanfei

Abstract

The ASEAN Power Grid (APG) is the grand plan for an integrated regional power grid system in Southeast Asia designed to benefit its member countries by optimizing the use of energy resources. In this paper, we study how to fairly distribute the benefit of the APG to its member countries by focusing on the Greater Mekong Subregion (GMS), which includes Cambodia, Laos, Myanmar, Thailand, and Vietnam. Using data from two different years, 2012 and 2020, we analyze 12 scenarios with different combinations of the generation and the transmission capacities together with the maximum percentage of power trade allowed. We propose to allocate the total cost saving of the GMS by using the Myerson (1977) value. We show that the resulting Myerson value allocation from the 2020 plan satisfies two stability properties: (1) core stability, which implies that it belongs to the core when the core is nonempty, so that no country has an incentive to leave the APG, and (2) pairwise stability, which implies that no country has an incentive to add a new transmission line or delete an existing transmission line.

Suggested Citation

  • Her, Yunji & Chang, Youngho & Chun, Youngsub & Li, Yanfei, 2018. "A cooperative game theoretic approach on the stability of the ASEAN power grid," Energy Economics, Elsevier, vol. 75(C), pages 492-502.
    • Handle: RePEc:eee:eneeco:v:75:y:2018:i:c:p:492-502
    DOI: 10.1016/j.eneco.2018.09.008
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    References listed on IDEAS

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    1. Jackson, Matthew O. & Wolinsky, Asher, 1996. "A Strategic Model of Social and Economic Networks," Journal of Economic Theory, Elsevier, vol. 71(1), pages 44-74, October.
    2. Roger B. Myerson, 1977. "Graphs and Cooperation in Games," Mathematics of Operations Research, INFORMS, vol. 2(3), pages 225-229, August.
    3. Youngho Chang & Yanfei Li, . "Power Generation and Cross-border Grid Planning for the Integrated ASEAN Electricity Market: A Dynamic Linear Programming Model," Chapters, in: Yanrui Wu & Xunpeng Shi & Fukunari Kimura (ed.), Energy Market Integration in East Asia: Theories, Electricity Sector and Subsidies, chapter 3, pages 37-58, Economic Research Institute for ASEAN and East Asia (ERIA).
    4. Watcharejyothin, Mayurachat & Shrestha, Ram M., 2009. "Effects of cross-border power trade between Laos and Thailand: Energy security and environmental implications," Energy Policy, Elsevier, vol. 37(5), pages 1782-1792, May.
    5. Li, Yanfei & Chang, Youngho, 2015. "Infrastructure investments for power trade and transmission in ASEAN+2: Costs, benefits, long-term contracts and prioritized developments," Energy Economics, Elsevier, vol. 51(C), pages 484-492.
    6. Cano Berlanga, Sebastian & Giménez Gómez, José M. (José Manuel) & Vilella Bach, Misericòrdia, 2015. "Enjoying cooperative games: The R package GameTheory," Working Papers 2072/247653, Universitat Rovira i Virgili, Department of Economics.
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    Cited by:

    1. Shi, Xunpeng & Yao, Lixia, 2020. "Economic Integration in Southeast Asia: The Case of the ASEAN Power Grid," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 35(1), pages 152-171.
    2. Chang, Hee-In & Chun, Youngsub & Her, Yunji, 2021. "A fair and stable benefit-sharing for the Northeast Asia Supergrid under flexible networks," Energy Economics, Elsevier, vol. 103(C).
    3. Qin, Quande & Liu, Yuan & Huang, Jia-Ping, 2020. "A cooperative game analysis for the allocation of carbon emissions reduction responsibility in China's power industry," Energy Economics, Elsevier, vol. 92(C).

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    More about this item

    Keywords

    ASEAN power grid; Greater Mekong Subregion; Myerson value; Core; Pairwise stability;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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