Equilibrium Values in a Competitive Power Exchange Market

Chonawee Supatgiat (), Rachel Q Zhang and John Birge

Computational Economics, 2001, vol. 17, issue 1, 93-121

Abstract: We consider an open electricity market with demand uncertainty. In this market, the generators each decide on a bidding price to maximize profit. Units are dispatched in order of the bid from lowest to highest until demand is satisfied. The market clearing price is the highest bid among the dispatched units. All dispatched units are then sold at this market clearing price. Under a market stability assumption, we derive Nash equilibrium solutions, i.e., bidders' optimal bidding strategies and the resulting market clearing price. Copyright 2001 by Kluwer Academic Publishers

Date: 2001
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