Equilibrium in Wholesale Electricity Markets
نویسندگان
چکیده
We develop game theoretic models to evaluate strategic behavior in deregulated electricity markets, with particular attention given to the market rules in place in California through the summer of 2000. We prove existence of a Nash equilibrium under two particular sets of market rules used by the CALPX and CAISO respectively. Next we derive a lower bound (strictly above marginal cost) on average equilibrium prices when there is a positive probability that at least one generator is capacity-constrained. Finally, we compare two competing methods for modelling competition in power markets: supply function equilibrium and discrete, multi-unit auctions and illustrate shortcomings of both approaches.
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