Microeconomic models of strategic interactions and their applications to wholesale electricity market(<Special Issue>Bilevel Programming, Optimization Methods, and Applications to Economics)

Abstract

The main wholesale electricity spot market characteristics and appropriate oligopoly microeconomic models of strategic interactions of producers in such a market are discussed in the paper. Equilibrium supply strategies and market outcomes for Cournot, Linear Supply Function equilibrium and Price Leadership models are obtained. Conjectured supply function approach that generalizes all these models is discussed. The bilevel model of producers' strategic interaction with network constraints is discussed and the most practically attractive approaches to its solution based on review of available publications are presented.