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Strategic bidding in continuous electricity auctions: an application to the Spanish electricity market

Juan Aparicio (), Juan Ferrando (), Ana Meca () and Julia Sancho ()

Annals of Operations Research, 2008, vol. 158, issue 1, 229-241

Abstract: In this paper we introduce an asymmetric model of continuous electricity auctions with limited production capacity and bounded supply functions. The strategic bidding is studied with this model by means of an electricity market game. We prove that for every electricity market game with continuous cost functions a mixed-strategy Nash equilibrium always exists. In particular, we focus on the behavior of producers in the Spanish electricity market. We consider a very simple form for the Spanish electricity market: an oligopoly consisting just of independent hydro-electric power production units in a single wet period. We show that a pure-strategy Nash equilibrium for the Spanish electricity market game always exists. Copyright Springer Science+Business Media, LLC 2008

Keywords: Continuous electricity auctions; Spanish electricity market; Electricity market game; Nash equilibrium (search for similar items in EconPapers)
Date: 2008
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Handle: RePEc:spr:annopr:v:158:y:2008:i:1:p:229-241:10.1007/s10479-007-0236-7