Find the core of the cost allocation game (example 1.44). Example 1.44 The Southern Electricity Region of
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Example 1.44
The Southern Electricity Region of India comprises four states: Andra Pradesh (AP), Kerala, Mysore, and Tamil Nadu (TN). In the past each state had tended to be self-sufficient in the generation of electricity. This led to suboptimal development for the region as a whole, with reliance on less economic alternative sources in Andra Pradesh and Tamil Nadu, instead of exploiting the excellent hydro resources in Mysore and Kerala.
The costs of developing the electric power system in the region, under various assumptions about the degree of cooperation between states, are summarized in the following table. To simplify the calculations, Kerala and Mysore have been amalgamated into a hybrid state (KM), since they are essentially similar in their hydro resources and power requirements. (The cost estimates were derived from a general investment planning and system operation model comprising 800 variables and 300 constraints.)
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No state will accept a cost share which exceeds what it can achieve on its own ...View the full answer
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