The Transactions of The Korean Institute of Electrical Engineers (전기학회논문지)

The Korean Institute of Electrical Engineers (대한전기학회)
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Supply Function Nash Equilibrium Considering Stochastic Demand Function

확률적 수요함수를 고려한 공급함수의 전략변수 내쉬균형 연구

  • Published : 2008.01.01
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Abstract

A bid-based pool(BBP) model is representative of energy market structure in a number of restructured electricity markets. Supply function equilibrium(SFE) models of interaction better match what is explicitly required in the bid formats of typical BBP markets. Many of the results in the SFE literature involve restrictive parametrization of the bid cost functions. In the SFE models, two parameters, intercept and slope, are available for strategic bidding. This paper addresses the realistic competition format that players can choose both parameters arbitrarily. In a fixed demand function, equilibrium conditions for generation company's profit maximization have a degree of freedom, which induces multi-equilibrium. So it is hard to choose a convergent equilibrium. However, consideration of stochastic demand function makes the equilibrium conditions independent each other based on the amount of variance of stochastic demand function. This variance provides the bidding players with incentives to change the slope parameter from an equilibrium for a fixed demand function until the slope parameter equilibrium.

Keywords

References

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