Journal of Regulatory Economics

, Volume 36, Issue 2, pp 127–153 | Cite as

Optimal expansion of the power transmission grid: why not?

  • Thomas-Olivier Léautier
  • Véronique Thelen
Original Article


While the transmission grid is essential to the operation of well-functioning electric power markets, it appears to be lacking in many regions. This article investigates the causes of this situation, that reviews the main prescriptions of the academic literature, and compares them with experience from sixteen jurisdictions that have restructured their power industry in the last twenty years. We find that vertical separation may be necessary, but is not sufficient to induce grid expansion: a well-designed incentive scheme is also required. When both vertical separation and specific incentives are present, significant congestion reduction is observed.


Electric power transmission grid expansion Incentives Regulation 

JEL Classifications

L52 L94 


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.Toulouse School of EconomicsToulouseFrance
  2. 2.University of Toulouse Graduate School of ManagementToulouseFrance

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