An ideal market would produce the exact same result right?
Well not quite... And this is a classic example.
With the current policy of location-independent markets, wind producers build in the best spots, and don't care about the massive expense (to the grid operator) of moving the power south. That isn't the ideal solution.
With the new proposed policy of per-location markets, the grid operator 'makes money' by moving power from places of high generation (low prices) to places with high demand (high prices).
But wait... That isn't the ideal solution either. The grid operator has an incentive to maximize their own profits, and if they ship too much power from north to south, then the price difference will be lowered, and their profits will decrease. So they will underbuild deliberately.
But wait you say - this is an ideal market, so there is no monopoly grid operator. In this ideal market, there are many grid operators, each competing to move power from the north to the south, and if one operator deliberately underbuilds, then another will build more to capture that profit. The end result is cables will keep being added till the money to be made equals the cost of the cables...
And that is equal to the ideal benevolent dictator solution!
But... That assumes a cable costs a certain £ amount per MWH transferred. But real cables have efficiencies of scale - one large cable is more money efficient than many competing small cables.
And considering that, you're back to the single-cable-operator problem. In the market, they are a monopoly and will underbuild. If they aren't a monopoly, whoever has the biggest cable takes all the profit, and becomes a monopoly. And if you artificially force there to be 10 small companies competing, then there will be 10 small money-inefficient cables.
There is no perfect answer, except a (non existent) benevolent dictator!