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On supply-function equilibria in radial transmission networks

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  • Holmberg, P.
  • Philpott, A.B.

Abstract

Transmission constraints limit competition and arbitrageurs’ possibilities of exploiting price differences between commodities in neighbouring markets. We analyze radial transmission-constrained networks with local demand shocks, where spatially distributed oligopoly producers compete with supply functions, as in wholesale electricity markets. We prove existence and uniqueness of supply-function equilibrium in two-node networks, and we are able to explicitly solve for symmetric supply-function equilibria in two-node and star networks.

Suggested Citation

  • Holmberg, P. & Philpott, A.B., 2018. "On supply-function equilibria in radial transmission networks," European Journal of Operational Research, Elsevier, vol. 271(3), pages 985-1000.
    • Handle: RePEc:eee:ejores:v:271:y:2018:i:3:p:985-1000
    DOI: 10.1016/j.ejor.2018.05.070
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    1. Horn, Henrik & Tangerås, Thomas, 2021. "National Transmission System Operators in an International Electricity Market," CEPR Discussion Papers 16289, C.E.P.R. Discussion Papers.

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