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On supply-function equilibria in radial transmission networks

Pär Holmberg () and A.B. Philpott

European Journal of Operational Research, 2018, vol. 271, issue 3, 985-1000

Abstract: Transmission constraints limit competition and arbitrageurs’ possibilities of exploiting price differences between commodities in neighbouring markets. We analyze radial transmission-constrained networks with local demand shocks, where spatially distributed oligopoly producers compete with supply functions, as in wholesale electricity markets. We prove existence and uniqueness of supply-function equilibrium in two-node networks, and we are able to explicitly solve for symmetric supply-function equilibria in two-node and star networks.

Keywords: OR in energy; Spatial competition; Supply-function equilibrium; Transmission network; Wholesale electricity markets (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:ejores:v:271:y:2018:i:3:p:985-1000