A method for analyzing Nash equilibrium based on clustering of generation companies

Jin Ho Kim, Jong Bae Park, Jun Ho Park, Sung Kwan Joo

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Feasibility of Nash equilibrium in generation markets is analyzed using a game theory for simplified competitive electricity markets. Generation companies in the markets are classified into two groups by the state of each company at equilibrium and a new method for obtaining Nash equilibrium in N-company spot markets is explored. Spot markets are assumed to be operated as uniform pricing auctions and generation companies are assumed to submit their bids into the auctions in the form of a seal-bid. The uniform pricing auctions in this analysis are formulated as games in which generation companies correspond to the players. The coefficient of the bidding function of company-n is assigned to the strategy of the player-n (company-n) and the payoff of the player-n is defined by his profit from the uniform price auction. Based on the concept of residual demand, best response functions of each generation company in the N-company auctions are analytically derived. Finally, an efficient way to obtain all the possible equilibrium set pairs and to examine their feasibilities as Nash equilibriums are suggested. A simple numerical example with three generation companies is demonstrated to show the basic ideas of the proposed method.

Original languageEnglish
Title of host publication2005 IEEE Power Engineering Society General Meeting
Pages414-419
Number of pages6
Publication statusPublished - 2005
Event2005 IEEE Power Engineering Society General Meeting - San Francisco, CA, United States
Duration: 2005 Jun 122005 Jun 16

Publication series

Name2005 IEEE Power Engineering Society General Meeting
Volume1

Other

Other2005 IEEE Power Engineering Society General Meeting
CountryUnited States
CitySan Francisco, CA
Period05/6/1205/6/16

Keywords

  • Classification of Generation Company
  • Equilibrium State
  • Nash Equilibrium Feasibility
  • Residual Demand

ASJC Scopus subject areas

  • Engineering(all)

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  • Cite this

    Kim, J. H., Park, J. B., Park, J. H., & Joo, S. K. (2005). A method for analyzing Nash equilibrium based on clustering of generation companies. In 2005 IEEE Power Engineering Society General Meeting (pp. 414-419). (2005 IEEE Power Engineering Society General Meeting; Vol. 1).