Models for Security Investment in Electricity Market

N. Zhang (USA)


Security investment, regulations, public good, equilibrium


System security is characterized as a damage control agent and a public good in this paper. We present several models on security investment provided by different agents ranging from private market participants to centralized organizations. The comparisons of equilibria among different models show that the policy choices associated with the security investment have fundamental effects on investment incentives and results. The first best security investment requires appropriate governmental regulations.

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