Mitigating the Inc‐Dec Game in Zonal Electricity Markets

Mitigating the Inc‐Dec Game in Zonal Electricity Markets | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Mitigating the Inc‐Dec Game in Zonal Electricity Markets Pär Holmberg This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-9073870/v1 This work is licensed under a CC BY 4.0 License Status: Under Review Version 1 posted 6 You are reading this latest preprint version Abstract In Europe, differences in how the zonal day-ahead market and the system operator’s real-time market handle power system constraints, such as transmission capacity, voltage levels, and system stability, create opportunities for regulatory arbitrage (the inc-dec game). This increases consumer costs, heightens outage risks, and distorts investment signals. The paper uses a competitive equilibrium model with sequential rationality to analyse the problem and identify mitigation measures. Key solutions include procurement of critical system services, local grid tariffs, tighter rules for participation in the real-time market, and modest grid enhancements that relax binding system constraints. JEL Classification: C72, D47, L51, L94, Q48 Congestion management zonal pricing countertrading redispatch real-time electricity market regulatory arbitrage inc-dec gaming Full Text Additional Declarations Competing interest reported. The project has been funded by Energiforsk. According to https://energiforsk.se/en/about-energiforsk/ "Energiforsk initiates, coordinates, and conducts research and analysis in the field of energy. We disseminate knowledge to contribute to a robust, sustainable and competitive energy system. Energiforsk is politically neutral and always strives for objectivity." Cite Share Download PDF Status: Under Review Version 1 posted Reviewers agreed at journal 13 Apr, 2026 Reviewers agreed at journal 17 Mar, 2026 Reviewers invited by journal 16 Mar, 2026 Editor assigned by journal 10 Mar, 2026 Submission checks completed at journal 10 Mar, 2026 First submitted to journal 09 Mar, 2026 You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. Also discoverable on Platform About Our Team In Review Editorial Policies Advisory Board Help Center Resources Author Services Accessibility API Access RSS feed Manage Cookie Preferences © Research Square 2026 | ISSN 2693-5015 (online) Privacy Policy Terms of Service Do Not Sell My Personal Information {"props":{"pageProps":{"initialData":{"identity":"rs-9073870","acceptedTermsAndConditions":true,"allowDirectSubmit":false,"archivedVersions":[],"articleType":"Research Article","associatedPublications":[],"authors":[{"id":607633035,"identity":"3d7a8c40-9ecf-47bb-b6b3-557cdffe9e31","order_by":0,"name":"Pär Holmberg","email":"data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAZAAAAAyAQMAAABI0h/eAAAABlBMVEX///8AAABVwtN+AAAACXBIWXMAAA7EAAAOxAGVKw4bAAAA30lEQVRIiWNgGAWjYJACZgYGCwYDEOuDgRzRWiTAWhhnGBiTqIWZh4EILebsZx8wF1RIRJuz9z5+bVNgkMfAf/gAXi2WPekGzDPOSOTu7DluZp1jYFDMIJGWgFeLwYE0BmbeNoncDTfS2IxzDP4kNkjwGODXcv4ZVMv9Z2zGFgYGiQ385z/g13IDbgsb82MGkBaGHLw6GCxnPGM4zAP2SxobYw9QS5tEGn6HmfOnMT7mqbDJ3c5+jPnDjz8Gif38hx/gdxgQH4Cy2STAJH5nQbTAADN+b4+CUTAKRsGIBQBZCj9de35MTwAAAABJRU5ErkJggg==","orcid":"","institution":"Research Institute of Industrial Economics","correspondingAuthor":true,"prefix":"","firstName":"Pär","middleName":"","lastName":"Holmberg","suffix":""}],"badges":[],"createdAt":"2026-03-09 13:54:16","currentVersionCode":1,"declarations":"","doi":"10.21203/rs.3.rs-9073870/v1","doiUrl":"https://doi.org/10.21203/rs.3.rs-9073870/v1","draftVersion":[],"editorialEvents":[],"editorialNote":"","failedWorkflow":false,"files":[{"id":104891151,"identity":"8f9a02d6-41e0-4a50-8e22-59c85039e069","added_by":"auto","created_at":"2026-03-18 10:43:02","extension":"pdf","order_by":1,"title":"","display":"","copyAsset":false,"role":"manuscript-pdf","size":875701,"visible":true,"origin":"","legend":"","description":"","filename":"MitigatingtheincdecgameMarch92026.pdf","url":"https://assets-eu.researchsquare.com/files/rs-9073870/v1_covered_47d28b15-9512-4a21-b908-f8e7fc27994c.pdf"}],"financialInterests":"Competing interest reported. 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