Supply Function Equilibrium Model Research Articles

Electricity Market Equilibrium Models: The Effect of Parameterization

In this paper, an example from the literature is used to compare Coumot and supply function equilibrium models of bid-based electricity markets both with and without transmission constraints. It is demonstrated that the parameterization of the supply function model has a significant effect on the calculated results. In particular, several results reported in the literature are artifacts of assumptions in the parameterization of the model.

Oligopolistic Competition in Power Networks: A Conjectured Supply Function Approach

Conjectured supply function (CSF) models of competition among power generators on a linearized DC network are presented. As a detailed survey of the power market modeling literature shows, CSF models differ from previous approaches in that they represent each generation company's (GenCo) conjectures regarding how rival firms will adjust sales in response to price changes. The CSF approach is a more realistic and flexible framework for modeling imperfect competition than other models for three reasons. First, the models include as a special case the Cournot conjecture that rivals will not change production if prices change; thus, the CSF framework is more general. Second, Cournot models cannot be used when price elasticity of demand is zero, but the proposed models can. Third, unlike supply function equilibrium models, CSF equilibria can be calculated for large transmission networks. Existence and uniqueness properties for prices and profits are reported. An application shows how transmission limits and strategic interactions affect equilibrium prices under forced divestment of generation.

A trade server for electricity e-commerce

This paper presents a trade server for electricity e-commerce. The server is generic and platform independent software that emulates human intelligence to trade electricity as a merchandise. It is built into each of the software agents that operate on behalf of the individual business entities in electricity markets. The server initiates trading with other agents through its modules following a designated strategy. The communication media among agents is the Internet. The software is component-based and is coded in C++. We use the Western System Coordinating Council (WSCC) system for testing. The results of the automated trade system are comparable to the results of the standard supply function equilibria model that may be used by human decision-makers. The automated trade system, however, requires less human workforce, reduces transaction time and better explores trading opportunities.

Determining Market Power in Deregulated Generation Markets by Measuring Price-Cost Margins

Supply function equilibrium models are potentially useful in judging the likely divergence of price from cost in deregulated generation markets. However, a model that attempts to predict the joint behavior of a number of sophisticated actors must be at least reasonably complex as well.