Automated Market Making for Energy Sharing

Michele Fabi (), Viraj Nadkarni, Leonardo Leone () and Matheus Venturyne Xavier Ferreira ()
Additional contact information
Michele Fabi: Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris, CREST - Centre de Recherche en Economie et Statistique [Bruz] - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - GENES - Groupe des Écoles Nationales d'Économie et Statistique, IP Paris - Institut Polytechnique de Paris
Viraj Nadkarni: Princeton University
Leonardo Leone: Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris, IP Paris - Institut Polytechnique de Paris
Matheus Venturyne Xavier Ferreira: University of Virginia

Working Papers from HAL

Abstract: We develop an axiomatic theory for Automated Market Makers (AMMs) in local energy sharing markets and analyze the Markov Perfect Equilibrium of the resulting economy with a Mean-Field Game. In this game, heterogeneous prosumers solve a Bellman equation to optimize energy consumption, storage, and exchanges. Our axioms identify a class of mechanisms with linear, Lipschitz continuous payment functions, where prices decrease with the aggregate supply-to-demand ratio of energy. We prove that implementing batch execution and concentrated liquidity allows standard design conditions from decentralized finance-quasi-concavity, monotonicity, and homotheticity-to construct AMMs that satisfy our axioms. The resulting AMMs are budget-balanced and achieve ex-ante efficiency, contrasting with the strategy-proof, expost optimal VCG mechanism. Since the AMM implements a Potential Game, we solve its equilibrium by first computing the social planner's optimum and then decentralizing the allocation. Numerical experiments using data from the Paris administrative region suggest that the prosumer community can achieve gains from trade up to 40% relative to the grid-only benchmark.

Keywords: Prosumers; Energy Sharing; Automated Market Makers; Mean Field Games (search for similar items in EconPapers)
Date: 2025-12-18
Note: View the original document on HAL open archive server: https://hal.science/hal-05424478v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-05424478v1/document (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:hal:wpaper:hal-05424478

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().