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Game Theoretic Analysis of Oligopolistic Competition: The Case of Pool-Based Electricity Markets

Langary, Damoun | 2013

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  1. Type of Document: Ph.D. Dissertation
  2. Language: Farsi
  3. Document No: 45206 (05)
  4. University: Sharif University of Technology
  5. Department: Electrical Engineering
  6. Advisor(s): Sadati, Nasser; Ranjbar, Ali Mohammad
  7. Abstract:
  8. This research investigates the competitive behavior of producers in an oligopolistic market structure and presents new approaches to contrive appropriate bidding strategies using game theory. As a case of oligopolistic competition, we have considered a simplified model of electricity markets, and turned our focus to related economic models of competition. In particular, the supply function model has been adopted because of its realistic simulation of the bidding structure in electricity markets, for which, a new method is proposed to provides closed-form expressions in computing Nash strategies. This method is not only capable of computing all Nash equilibriums of the model, but also the existence and uniqueness of its solution is guaranteed. The approach is later extended to show its applicability to real markets in presence of technical limitations such as capacity and transmission constraints.
    The significant characteristic of the proposed approach, is its analytical nature, which not only empowers us to analyze the market equilibrium and acquire an insight of its functioning, but also can be utilized as a powerful tool by generating companies, as players, to devise advanced, more efficient strategies in various practical market situations. Using this notion, the new concept of “Robust Nash strategies” has been introduced, and later computed, for generating companies to stabilize their bidding behavior while facing demand uncertainties in the market. Furthermore, in another attempt, by restructuring the competition model as an extensive-form game, the concept of “Max-Min Nash strategies” has been proposed, and computed, for the players to preserve their profitability in presence of any types of uncertainty, regardless of its source. Results of numerous simulations, affirm the applicability and efficiency of the proposed approach in computing Nash strategies for market players. Moreover, several scenarios were adopted to simulate market uncertainties, and the results confirm the superiority of the devised bidding strategies in the face of practical market perturbations, in comparison with traditionally-computed strategies.
  9. Keywords:
  10. Bidding Strategy ; Game Theory ; Oligopolistic Competition ; Nash Equilibrium Point ; Electricity Market ; Supply Function Model ; Robust Strategies

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