Electric Power Network Oligopoly as a Dynamic Stackelberg Game

Pedro A. Neto (), Terry L. Friesz () and Ke Han ()
Additional contact information
Pedro A. Neto: HP Inc.
Terry L. Friesz: Pennsylvania State University
Ke Han: Imperial College London

Networks and Spatial Economics, 2016, vol. 16, issue 4, No 10, 1241 pages

Abstract: Abstract Over the last two decades, the electricity industry has shifted from regulation of monopolistic and centralized utilities towards deregulation and promoted competition. With increased competition in electric power markets, system operators are recognizing their pivotal role in ensuring the efficient operation of the electric grid and the maximization of social welfare. In this article, we propose a hypothetical new market of dynamic spatial network equilibrium among consumers, system operators and electricity generators as solution of a dynamic Stackelberg game. In that game, generators form an oligopoly and act as Cournot-Nash competitors who non-cooperatively maximize their own profits. The market monitor attempts to increase social welfare by intelligently employing equilibrium congestion pricing anticipating the actions of generators. The market monitor influences the generators by charging network access fees that influence power flows towards a perfectly competitive scenario. Our approach anticipates uncompetitive behavior and minimizes the impacts upon society. The resulting game is modeled as a Mathematical Program with Equilibrium Constraints (MPEC). We present an illustrative example as well as a stylized 15-node network of the Western European electric grid.

Keywords: Energy economics; Electricity markets; Game theoretic models; Stackelberg game (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1007/s11067-016-9337-7 Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:netspa:v:16:y:2016:i:4:d:10.1007_s11067-016-9337-7

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/11067/PS2

DOI: 10.1007/s11067-016-9337-7

Access Statistics for this article

Networks and Spatial Economics is currently edited by Terry L. Friesz

More articles in Networks and Spatial Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().