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The roubstness of agent-based models of electricity wholesale markets

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  • Newberry, D.
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    Abstract

    Agent-based modelling is an attractive way of finding equilibria in complex problems involving strategic behaviour, particularly in electricity markets with transmission constraints. However, while it may be possible to demonstrate convergence of learning behaviour to a Nash equilibrium, that is not sufficient to establish that the equilibrium is robust against more sophisticated strategy choices. This note examines two particular forms of agent-based modelling used in electricity market models, both variants of mark-up pricing, and demonstrates that they are robust against other strategies.Keywords: Electric utilities, industrial policy, political economy

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    File URL: http://www.econ.cam.ac.uk/research/repec/cam/pdf/cwpe1228.pdf
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    Bibliographic Info

    Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1228.

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    Date of creation: 28 May 2012
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    Handle: RePEc:cam:camdae:1228

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    Web page: http://www.econ.cam.ac.uk/index.htm

    Related research

    Keywords: agent-based modelling; electricity markets; mark-up equilibria; stability; oligopoly; learning;

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    1. Green, Richard & Newbery, David M G, 1991. "Competition in the British Electricity Spot Market," CEPR Discussion Papers 557, C.E.P.R. Discussion Papers.
    2. Mahenc, P. & Salanie, F., 2004. "Softening competition through forward trading," Journal of Economic Theory, Elsevier, vol. 116(2), pages 282-293, June.
    3. Grant, Simon & Quiggin, John, 1994. "Nash equilibrium with mark-up-pricing oligopolists," Economics Letters, Elsevier, vol. 45(2), pages 245-251, June.
    4. Weidlich, Anke & Veit, Daniel, 2008. "A critical survey of agent-based wholesale electricity market models," Energy Economics, Elsevier, vol. 30(4), pages 1728-1759, July.
    5. Zhang, T. & Nuttall, W.J., 2007. "An Agent Based Simulation Of Smart Metering Technology Adoption," Cambridge Working Papers in Economics 0760, Faculty of Economics, University of Cambridge.
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