Arbeitspapier

Supply Function Equilibrium over a Constrained Transmission Line II: Multiple Plants and Nodal Price Derivatives

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Market power in electricity wholesale markets arises when generators have incentives to mark up their offers above the cost of production.I model a transmission network with a single line. I derive optimality conditions for supply functions for generators who supply energy at both ends of the line, and also for generators who hold financial derivatives on the locational prices. These financial derivatives include contracts for differences as well as fiancial transmission rights. One way that generators can manipulate prices in their favor is by inducing congestion in the network. I find that dispersed ownership and financial transmission rights are both effective ways to reduce strategic congestion of the line. I also fid that certain portfolios of contracts for differences can lead to multiple supply function equilibria.

Sprache
Englisch

Erschienen in
Series: IFN Working Paper ; No. 1209

Klassifikation
Wirtschaft
Existence and Stability Conditions of Equilibrium
Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
Market Design
Oligopoly and Other Imperfect Markets
Electric Utilities
Thema
Supply function equilibrium
Electricity markets
Market power
Financial transmission rights

Ereignis
Geistige Schöpfung
(wer)
Ruddell, Keith
Ereignis
Veröffentlichung
(wer)
Research Institute of Industrial Economics (IFN)
(wo)
Stockholm
(wann)
2018

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Ruddell, Keith
  • Research Institute of Industrial Economics (IFN)

Entstanden

  • 2018

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