The Behavior of Iranian Restructured Electricity Market in Supply Function Equilibrium Framework

Majid Motamedi (), Shahram Moeeni (), Salman Gharakhani () and Iman Keyfarokhi ()

International Journal of Academic Research in Business and Social Sciences, 2014, vol. 4, issue 1, 178-191

Abstract: The Iranian electricity industry has been restructured following the global experiences. The main objective of restructuring is transition from natural monopoly towards competition in order to improve efficiency. Currently, the Iranian electricity market is performing as imperfect competition and Pay-as-Bid (PAB) auctions are the major trade mechanism in this market. This paper proves that Supply Function Equilibrium (SFE) is an appropriate approach to analyze behavior of the Iranian electricity market. Isfahan electricity market has been considered as a case study in which SFE is applied regarding marginal cost estimation as well as demand uncertainty. The derived SFE indicates that there is major difference between SFE and Nash equilibrium.

Keywords: Restructuring; Game theory; Supply Function Equilibrium; Pay-as-Bid; Electricity market; Iran (search for similar items in EconPapers)
JEL-codes: C70 D21 D40 L13 Q41 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijarbs:v:4:y:2014:i:1:p:178-191

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