Coordinated electricity spot markets support open access to existing transmission grids. Associated financial transmission rights provide a key ingredient for long-term contracting and property rights for grid expansion. Design of a mixed system of merchant and regulated transmission investment presents a challenge for regulators and market participants. With the right choice, merchant transmission investment could play a significant but not exclusive role in efficient transmission expansion. With the wrong choice, the unintended consequences could undermine the whole foundation of electricity market restructuring.
Hogan, William W. "Transmission Market Design." KSG Faculty Research Working Papers Series RWP03-040, October 2003.