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Strategic bidding in continuous electricity auctions: an application to the Spanish electricity market

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  • Juan Aparicio
  • Juan Ferrando
  • Ana Meca
  • Julia Sancho

Abstract

In this paper we introduce an asymmetric model of continuous electricity auctions with limited production capacity and bounded supply functions. The strategic bidding is studied with this model by means of an electricity market game. We prove that for every electricity market game with continuous cost functions a mixed-strategy Nash equilibrium always exists. In particular, we focus on the behavior of producers in the Spanish electricity market. We consider a very simple form for the Spanish electricity market: an oligopoly consisting just of independent hydro-electric power production units in a single wet period. We show that a pure-strategy Nash equilibrium for the Spanish electricity market game always exists. Copyright Springer Science+Business Media, LLC 2008

Suggested Citation

  • Juan Aparicio & Juan Ferrando & Ana Meca & Julia Sancho, 2008. "Strategic bidding in continuous electricity auctions: an application to the Spanish electricity market," Annals of Operations Research, Springer, vol. 158(1), pages 229-241, February.
  • Handle: RePEc:spr:annopr:v:158:y:2008:i:1:p:229-241:10.1007/s10479-007-0236-7
    DOI: 10.1007/s10479-007-0236-7
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    Cited by:

    1. F. Bonomo & J. Catalán & G. Durán & R. Epstein & M. Guajardo & A. Jawtuschenko & J. Marenco, 2017. "An asymmetric multi-item auction with quantity discounts applied to Internet service procurement in Buenos Aires public schools," Annals of Operations Research, Springer, vol. 258(2), pages 569-585, November.
    2. Vyacheslav Kalashnikov & Vladimir Bulavsky & Vitaliy Kalashnikov & Nataliya Kalashnykova, 2014. "Structure of demand and consistent conjectural variations equilibrium (CCVE) in a mixed oligopoly model," Annals of Operations Research, Springer, vol. 217(1), pages 281-297, June.
    3. Ghaninejad, Mousa, 2020. "عرضه، تقاضا، و پیشنهاد قیمت در بازار برق ایران [Supply, Demand, and Bidding in Iran’s Electricity Market]," MPRA Paper 105340, University Library of Munich, Germany.
    4. Debin Fang & Qiyu Ren & Qian Yu, 2018. "How Elastic Demand Affects Bidding Strategy in Electricity Market: An Auction Approach," Energies, MDPI, Open Access Journal, vol. 12(1), pages 1-13, December.

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