dorsal/arxiv
View SchemaMicro-economic Analysis of the Physical Constrained Markets: Game Theory Application to Competitive Electricity Markets
| Authors | Ettore Bompard, Yuchao Ma, Elena Ragazzi |
|---|---|
| Categories | |
| ArXiv ID | physics/0512210 |
| URL | https://arxiv.org/abs/physics/0512210 |
| DOI | 10.1140/epjb/e2006-00122-1 |
Abstract
Competition has been introduced in the electricity markets with the goal of reducing prices and improving efficiency. The basic idea which stays behind this choice is that, in competitive markets, a greater quantity of the good is exchanged at a lower and a lower price, leading to higher market efficiency. Electricity markets are pretty different from other commodities mainly due to the physical constraints related to the network structure that may impact the market performance. The network structure of the system on which the economic transactions need to be undertaken poses strict physical and operational constraints. Strategic interactions among producers that game the market with the objective of maximizing their producer surplus must be taken into account when modeling competitive electricity markets. The physical constraints, specific of the electricity markets, provide additional opportunity of gaming to the market players. Game theory provides a tool to model such a context. This paper discussed the application of game theory to physical constrained electricity markets with the goal of providing tools for assessing the market performance and pinpointing the critical network constraints that may impact the market efficiency. The basic models of game theory specifically designed to represent the electricity markets will be presented. IEEE30 bus test system of the constrained electricity market will be discussed to show the network impacts on the market performances in presence of strategic bidding behavior of the producers.
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"abstract": "Competition has been introduced in the electricity markets with the goal of\nreducing prices and improving efficiency. The basic idea which stays behind\nthis choice is that, in competitive markets, a greater quantity of the good is\nexchanged at a lower and a lower price, leading to higher market efficiency.\nElectricity markets are pretty different from other commodities mainly due to\nthe physical constraints related to the network structure that may impact the\nmarket performance. The network structure of the system on which the economic\ntransactions need to be undertaken poses strict physical and operational\nconstraints. Strategic interactions among producers that game the market with\nthe objective of maximizing their producer surplus must be taken into account\nwhen modeling competitive electricity markets. The physical constraints,\nspecific of the electricity markets, provide additional opportunity of gaming\nto the market players. Game theory provides a tool to model such a context.\nThis paper discussed the application of game theory to physical constrained\nelectricity markets with the goal of providing tools for assessing the market\nperformance and pinpointing the critical network constraints that may impact\nthe market efficiency. The basic models of game theory specifically designed to\nrepresent the electricity markets will be presented. IEEE30 bus test system of\nthe constrained electricity market will be discussed to show the network\nimpacts on the market performances in presence of strategic bidding behavior of\nthe producers.",
"arxiv_id": "physics/0512210",
"authors": [
"Ettore Bompard",
"Yuchao Ma",
"Elena Ragazzi"
],
"categories": [
"physics.soc-ph",
"physics.data-an",
"q-fin.TR"
],
"doi": "10.1140/epjb/e2006-00122-1",
"title": "Micro-economic Analysis of the Physical Constrained Markets: Game Theory Application to Competitive Electricity Markets",
"url": "https://arxiv.org/abs/physics/0512210"
},
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