Automated Market Making for Energy Sharing

Michele Fabi, Viraj Nadkarni, Leonardo Leone and Matheus X. V. Ferreira

Papers from arXiv.org

Abstract: We develop an axiomatic theory for Automated Market Makers (AMMs) in local energy sharing markets and analyze the Markov Perfect Equilibrium of the resulting economy with a Mean-Field Game. In this game, heterogeneous prosumers solve a Bellman equation to optimize energy consumption, storage, and exchanges. Our axioms identify a class of mechanisms with linear, Lipschitz continuous payment functions, where prices decrease with the aggregate supply-to-demand ratio of energy. We prove that implementing batch execution and concentrated liquidity allows standard design conditions from decentralized finance-quasi-concavity, monotonicity, and homotheticity-to construct AMMs that satisfy our axioms. The resulting AMMs are budget-balanced and achieve ex-ante efficiency, contrasting with the strategy-proof, expost optimal VCG mechanism. Since the AMM implements a Potential Game, we solve its equilibrium by first computing the social planner's optimum and then decentralizing the allocation. Numerical experiments using data from the Paris administrative region suggest that the prosumer community can achieve gains from trade up to 40% relative to the grid-only benchmark.

Date: 2025-12
New Economics Papers: this item is included in nep-des and nep-mst
References: Add references at CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2512.24432 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2512.24432

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().