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Tracing based transmission pricing of cross-border trades: fundamentals and circular flows

In this paper two issues related to the tracing- based transmission pricing have been raised. Firstly the graph-based algorithm has been compared with the algorithm based on the solution of linear equations. It is shown that both algorithms are computationally equivalent when the diagraph of power flows is acyclic. When the diagraph is cyclic, the graph-based algorithm fails. The second issue was the problem of eliminating cycles from the diagraph of flows. A practical algorithm has been presented.