Karaca, O.Delikaraoglou, S.Kamgarpour, Maryam2021-12-012021-12-012021-12-01202110.1016/j.orl.2021.05.009https://infoscience.epfl.ch/handle/20.500.14299/183298Considering the sequential clearing of energy and reserves in Europe, enabling inter-area reserve exchange requires optimally allocating inter-area transmission capacities between these two markets. To achieve this, we provide a market-based allocation framework and derive payments with desirable properties. The proposed min-max least core selecting payments achieve individual rationality, budget balance, and approximate incentive compatibility and coalitional stability. The results extend the works on private discrete items to a network of continuous public choices. © 2021 The Author(s)Coalitional game theoryElectricity marketsMechanism designPublic choice problemtext::journal::journal article::research article