Bayesian Nash equilibrium bidding strategies for generation companies

Abstract

With the reform of the electric power system and the development of generation power market in China, it is of significance to develop bidding strategies for generators. Bidding strategy is the profile of bidding price and bidding quantities, which is submitted by market participants, and auctioneer determines a rule to allocate the aggregate demand quantity among all generators, regarded as auction problem with divisible object. This paper describes discriminating pricing auction rule with divisible object auction, builds the Bayesian game model of the divisible object auction under the generator's private cost information. Moreover, we resolve Nash equilibrium of a Bayesian game, transform Nash equilibrium of a Bayesian game as Nash equilibrium of the strategic game, with regarding marginal cost as the type of players, and get bidder's bidding strategy under a certain marginal cost function of bidder.