Supply function equilibria: Step functions and continuous representations

Supply function equilibria: Step functions and continuous representations

In most wholesale electricity markets generators must submit step-function offers of supply to a uniform price auction, and the market is cleared at the price of the most expensive offer needed to meet realised demand. Such markets can most elegantly be modelled as the pure-strategy, Nash Equilibrium of continuous supply functions, in which each supplier has a unique profit maximising choice of...

Coalition-proof supply function equilibria in oligopoly

Finding Supply Function Equilibria with Asymmetric Firms

Firms compete in supply functions when they offer a schedule of prices and quantities into a market; for example, this occurs in many wholesale electricity markets. We study the equilibrium behaviour when firms differ, both with regard to their costs and their capacities. We characterize the types of equilibrium solution that can occur. If the demand can be low enough for it to be met economica...

Partial Continuous Functions and Admissible Domain Representations

It is well known that to be able to represent continuous functions between domain representable spaces it is critical that the domain representations of the spaces we consider are dense. In this article we show how to develop a representation theory over a category of domains with morphisms partial continuous functions. The raison d’être for introducing partial continuous functions is that by p...

Supply function equilibria with capacity constraints and pivotal suppliers

The concept of a supply function equilibrium (SFE) has been widely used to model generators’ bidding behavior and market power issues in wholesale electricity markets. Observers of electricity markets have noted how generation capacity constraints may contribute to market power of generation firms. If a generation firm’s rivals are capacity constrained then the firm may be pivotal; that is, the...