As competitive reforms are introduced into the electric power industry, much attention has focused on the potential market organization of the industry'stransmission sector. PWP-034 analyzes the incentives for grid investment which result from various proposed transmission network regimes. In particular, Bushnell and Stoft focus on ''transmission congestion contracts'' within a contract network regime such as proposed by William Hogan. They formalize a rule for awarding these new property rights to investors, and show that under certain conditions, this contract network approach can effectivelydeter detrimental investments, some of which are encouraged under other regimes. However, the authors show that when these conditions are not met, market participants may still find it profitable to undertake network alterations detrimental to the network as a whole.