Assessing incentives for multinational cooperation towards a North Sea Offshore Grid using allocation methods from coalitional game theory
Journal article, Peer reviewed
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Original versionIAEE International Conference. 2018, .
The North Sea Offshore Grid (NSOG) has been recognized as a beneficial infrastructure project with respect to both economic and environmental concerns. Because of the absence of a supra-national planner, system optimal investments are dependent on cooperation among the surrounding countries. The most valuable expansion plans at system level tend to represent a high degree of uncertainty regarding the distribution of costs and benefits to the individual countries and, consequently, their incentives to cooperate. In order to better understand fair and stable cooperative solutions for multinational infrastructure projects, we present an analytic framework based on coalitional game theory. In combination with an expansion planning model, we are able to assess different allocation schemes for costs and benefits. Each represents different targets of fairness. Allocation schemes include the natural outcome without any side-payments, in addition to two other methods where side-payments are required, namely the Shapley value and the nucleolus. The resulting allocations are demonstrated with a NSOG case study with varying outcomes reflecting their properties and axioms. This could be a useful tool for decision support.