The rapid restructuring of the electric power industry from a vertically integrated entity into a decentralized industry has given rise to complex problems. In particular, the transmission component of the electric power system requires new methodologies to fully capture this emerging competitive industry. Game theory models are used to model strategic interactions in a competitive environment. This thesis presents a new decentralized framework to study the transmission network expansion problem using cooperative game theory. First, the players and the rules of the game are defined. Second, a coalition formation scheme is developed. Finally, the optimized cost of expansion is allocated based on the history of the coalition formation.
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