Using EPECs to Model Bilevel Games in Restructured Electricity Markets with Locational Prices

Xinmin Hu () and Daniel Ralph ()
Additional contact information
Xinmin Hu: Australian School of Business, University of New South Wales, NSW 2052, Australia
Daniel Ralph: Judge Business School, University of Cambridge, Cambridge CB2 1AG, United Kingdom

Operations Research, 2007, vol. 55, issue 5, 809-827

Abstract: We study a bilevel noncooperative game-theoretic model of restructured electricity markets, with locational marginal prices. Each player in this game faces a bilevel optimization problem that we model as a mathematical program with equilibrium constraints (MPEC). The corresponding game is an example of an equilibrium program with equilibrium constraints (EPEC). We establish sufficient conditions for the existence of pure-strategy Nash equilibria for this class of bilevel games and give some applications. We show by examples the effect of network transmission limits, i.e., congestion, on the existence of equilibria. Then we study, for more general equilibrium programs with equilibrium constraints, the weaker pure-strategy concepts of local Nash and Nash stationary equilibria. We pose the latter as solutions of complementarity problems (CPs) and show their equivalence with the former in some cases. Finally, we present numerical examples of methods that attempt to find local Nash equilibria or Nash stationary points of randomly generated electricity market games.

Keywords: government; energy policies; electricity market; industries; electric; economic dispatch; game/group decisions; noncooperative; bidding/auctions (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (98)

Downloads: (external link)
http://dx.doi.org/10.1287/opre.1070.0431 (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:55:y:2007:i:5:p:809-827

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().