Antimonopoly regulation method in energy markets based on the Vickrey–Clarke–Groves mechanism

We evaluate the applicability of generic Vickrey-Clarke-Groves (VCG) mechanism as an antimonopoly measure against a profit-maximizing producer with market power operating portfolio generating units at centralized two-settlement energy market. The may indicate in its bid not only altered cost function but also distorted values technical parameters units, which enter system-wide constraints dispatch optimization problem. To ensure VCG method this setting, we identify additional assumption on changes feasible set problem induced by variations producer's parameters. In framework mechanism, propose regulation based regulator estimate truthful bid. If is exact, maximum profit coincides that case bidding when no applied. error affects neither (weakly) dominant nor optimal nodal output manifests itself total uplift payment. This ensures efficient allocation form output/consumption schedule and shields (pre-uplift) prices from power. compare suggested alternative approach replacement composed regulator.