Theory Seminar

Electricity Pooling Markets with Strategic Producers Possessing Asymmetric Information

Demosthenis TeneketzisU-M

In the restructured electricity industry, electricity pooling markets are an oligopoly with strategic producers possessing private information (private production cost function). We focus on pooling markets where aggregate demand is represented by a non-strategic agent. We consider
both elastic and inelastic demand.

We propose two market mechanisms, one for elastic the other for inelastic demand, that have the following features. (F1) They are individually rational. (F2) They are budget balanced. (F3) They are price efficient, that is, at equilibrium the price of electricity is equal to the marginal cost of production. (F4) The energy production profile corresponding to every non-zero Nash equilibrium of the game induced by each mechanism is a solution of the corresponding centralized problem where the objective is the maximization of the sum of the producers' and consumers' utilities.

We identify some open problems associated with our approach to electricity pooling markets.

Joint work with Mohammad Rasouli.

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