A Mixed Complementarity-Based Equilibrium Model of Natural Gas Markets
Steven A. Gabriel (),
Supat Kiet () and
Jifang Zhuang ()
Additional contact information
Steven A. Gabriel: Project Management Program, Department of Civil and Environmental Engineering, University of Maryland, College Park, Maryland 20742
Supat Kiet: Project Management Program, Department of Civil and Environmental Engineering, University of Maryland, College Park, Maryland 20742
Jifang Zhuang: Project Management Program, Department of Civil and Environmental Engineering, University of Maryland, College Park, Maryland 20742
Operations Research, 2005, vol. 53, issue 5, 799-818
Abstract:
We present a new multiseasonal, multiyear, natural gas market equilibrium model based on the concept of a competitive equilibrium involving the market participants: producers, storage reservoir operators, peak gas operators, pipeline operators, marketers, and consumers. The first three classes are depicted as price-takers consistent with perfect competition. The pipeline operations are described with regulated tariffs, but also involve “congestion pricing” as a mechanism to allocate scarce pipeline capacity. The marketers are price-takers in all markets except in sales to consumers, in which they compete as Nash-Cournot players. Finally, consumers are described by demand curves for each of the four sectors: residential, commercial, industrial, and electric power. We show that the equilibrium model is an instance of a mixed nonlinear complementarity problem (NCP) and provide sufficient detail not generally seen in previous complementarity models of natural gas. The NCP formulation is derived from considering the Karush-Kuhn-Tucker optimality conditions of the optimization problems faced by these participants. Under mild conditions, we show that this NCP has a solution, and under additional reasonable conditions, we show that the market prices are unique. We also validate the model on a representative sample network with nine market participants and three seasons, using four scenarios.
Keywords: games/group decisions: noncooperative; programming: complementarity; industries: petroleum/natural gas; marketing: competitive strategy; natural resources: energy (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (58)
Downloads: (external link)
http://dx.doi.org/10.1287/opre.1040.0199 (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:inm:oropre:v:53:y:2005:i:5:p:799-818
Access Statistics for this article
More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().