297 2019 eng 343 359 285 (1) article 1 2019-12-18 2019-12-18 -- Ongoing policy discussions on the reconfiguration of bidding zones in European electricity markets induce uncertainty about the future market design. This paper deals with the question of how this uncertainty affects market participants and their long-run investment decisions in generation and transmission capacity. Generalizing the literature on pro-active network expansion planning, we propose a stochastic multilevel model which incorporates generation capacity investment, network expansion, and market operation, taking into account uncertainty about the future bidding zone configuration. Using a stylized two-node network, we disentangle different effects that uncertainty has on market outcomes. If there is a possibility that future bidding zone configurations provide improved regional price signals, welfare gains materialize even if the change does not actually take place. As a consequence, welfare gains of an actual change of the bidding zone configuration are substantially lower due to those anticipatory effects. Additionally, we show substantial distributional effects in terms of both expected gains and risks, between producers and consumers and between different generation technologies. European Journal of Operational Research 10.1016/j.ejor.2020.01.024 Published Creative Commons - CC BY - Namensnennung 4.0 International Mirjam Ambrosius Jonas Egerer Veronika Grimm Adriaan H. van der Weijde Friedrich-Alexander-Universität Erlangen-Nürnberg B08 University of Edinburgh https://opus4.kobv.de/opus4-trr154/files/297/Uncertainty_Market_Design_PREPRINT.pdf