TY - JOUR
T1 - The demand elasticity impacts on the strategic bidding behavior of the electricity producers
AU - Bompard, E
AU - YC, Ma
AU - Napoli, R
AU - ABRATE, Graziano
N1 - Funding Information:
Manuscript received June 21, 2006; revised October 3, 2006. This work was supported in part by the LAGRANGE project of Turin (supported by Institute for Scientific Interchange—ISI Foundation and CRT Foundation) and in part by HERMES—Higher Education and Research on Mobility regulation and Economics of local Services of Turin. Paper no. TPWRS-00389-2006.
PY - 2007
Y1 - 2007
N2 - Due to the oligopoly structure of the electricity markets and to the constraints imposed by the transmission network, the producers may exert market power by strategically bidding higher than their marginal costs. This brings market performance far from the perfect competition equilibrium, with higher market clearing price and extra surpluses obtained by the producers. Demand elasticity can significantly affect the market performance contributing to mitigate the strategic bidding behavior of the producers. Compared to other commodity markets, demand elasticity in the electricity markets is low, but even a small increase can result in appreciable improvement of the market performance. The network constraints of the power system play a specific role in determining the oligopoly equilibrium of the gaming behavior of the electricity producers. The model of supply function equilibrium is first applied to a simple three-bus test system for a conceptual analysis and then to a standard IEEE 30-bus test system. The effects of an increase of demand elasticity are assessed, resorting to a set of proper quantitative indexes.
AB - Due to the oligopoly structure of the electricity markets and to the constraints imposed by the transmission network, the producers may exert market power by strategically bidding higher than their marginal costs. This brings market performance far from the perfect competition equilibrium, with higher market clearing price and extra surpluses obtained by the producers. Demand elasticity can significantly affect the market performance contributing to mitigate the strategic bidding behavior of the producers. Compared to other commodity markets, demand elasticity in the electricity markets is low, but even a small increase can result in appreciable improvement of the market performance. The network constraints of the power system play a specific role in determining the oligopoly equilibrium of the gaming behavior of the electricity producers. The model of supply function equilibrium is first applied to a simple three-bus test system for a conceptual analysis and then to a standard IEEE 30-bus test system. The effects of an increase of demand elasticity are assessed, resorting to a set of proper quantitative indexes.
UR - https://iris.uniupo.it/handle/11579/25715
U2 - 10.1109/TPWRS.2006.889134
DO - 10.1109/TPWRS.2006.889134
M3 - Article
SN - 0885-8950
VL - 22
SP - 188
EP - 197
JO - IEEE Transactions on Power Systems
JF - IEEE Transactions on Power Systems
IS - 1
ER -