Last week's blackout in the U.S. and Canada is a classic case of network failure. Deregulation of the industry results in more discrete actors free to select power sources across the grid. Also, power generators have an incentive to fill the grid w/ power, since running equipment at max capacity maximizes return. So the network connections become even more critical, and strained, since investment in transmission has not kept up w/ demand. A local problem, given the interconnections of the network and the fragility of the connections, cascades into global failure.

See a column I did: "Lights out!", http://www.lrna.org/columns/jdav/lightsout.html

The WSJ today (8/18/03) has some good articles are graphics about this.