Coordination Under Uncertain Conditions: An Analysis of the Fukushima Catastrophe

Published By: ADBI on eSS | Published Date: October, 03 , 2011

This paper analyzes the impacts of the 11 March 2011 earthquake and tsunami at the Fukushima nuclear power plant in Japan, which were amplified by a failure of coordination across the plant, corporate, industrial, and regulatory levels, resulting in a nuclear catastrophe, comparable in cost to Chernobyl. It derives generic lessons for industrial structure and regulatory frame of the electric power industry by identifying the two shortcomings of a horizontal coordination mechanism: instability under large shock and the lack of “defense in depth.” The suggested policy response is to harness the power of “open-interface-rule-based modularity” by creating an independent nuclear safety commission and an independent system operator owning the transmission grids in Japan. A transitory price mechanism is provided that can restrain price volatility while providing investment incentives. [Working Paper 316]. URL:[].

Author(s): Masahiko Aoki, Geoffrey Rothwell | Posted on: Nov 03, 2011 | Views(426) | Download (346)

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