Spatially Oligopolistic Models with Cournot Producers and Regulated Transportation Prices

Jing-Yuan Wei and Yves Smeers ()
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Jing-Yuan Wei: Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium
Yves Smeers: Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium

No 1996020, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: An oligopoly with spatially dispersed producers and consumers and with multi-period demands is modeled in the paper. The producers are assumed to behave in a Cournot manner with regulated transportation prices. The story of the game is as follows: each producer takes its rivals' outputs (generation, supply, and flows) and the prices for transportation services as fixed when it decides upon its output to maximize its profit; the transportation firms take the quantities of transportation services demanded by the producers as fixed when they determine the transportation prices through certain regulations. An equilibrium of the model is a set of the producers' outputs at which no producer will obtain more profit if it unilaterally modifies its output from this set, and a set of transportation prices satisfying certain regulatory requirements. Variational inequality and nonlinear complementarity approaches are used for computing equilibria of the model. This model and its two variants are applied to simulate a long run electricity market where transmission prices are regulated.

Date: 1996-05-01
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