This survey article deals with the complex topic of transmission capac
ity, starting from its definition through modeling and analysis. Metho
ds for evaluating transmission capacity are also briefly described. Th
e second part of the article is concerned with possible means of incre
asing the transmission capacity at the locations of most interest. The
third part is concerned with possible economic incentives for enhanci
ng transmission capacity in a changing electric power industry. (C) 19
97 Elsevier Science Ltd.