IDEAS home Printed from https://ideas.repec.org/p/enp/wpaper/eprg0824.html

Analytic Solutions for Supply Function Equilibria: Uniqueness and Stability

Author

Listed:
  • David Newbery

    (Faculty of Economics University of Cambridge)

Abstract

Supply Function Equilibria (SFE) offer an attractive equilibrium concept for an electricity Pool in which all suppliers receive the market clearing price and are an important tool for examining market power. It is helpful to have analytical solutions available for simple models to explore market behaviour and to check computational solutions. This note derives analytic solutions for the symmetric case of linear and quadratic costs, and where each firm has an identical set of constant but different marginal cost technologies, as in most practical applications to data. Such stepped marginal cost schedules can replicate general marginal cost schedules to any desired degree of accuracy and hence symmetric SFEs can be solved analytically by piecing together recursively defined supply functions for general cost functions. The paper discusses the question of the uniqueness and stability of these symmetric solutions, but notes that finding asymmetric analytic solutions is generally difficult. It collects together and extends results scattered in earlier working papers to make them more accessible.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • David Newbery, 2008. "Analytic Solutions for Supply Function Equilibria: Uniqueness and Stability," Working Papers EPRG 0824, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg0824
    as

    Download full text from publisher

    File URL: https://www.jbs.cam.ac.uk/wp-content/uploads/2023/12/eprg-wp0824.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pär Holmberg, 2011. "Strategic Forward Contracting in the Wholesale Electricity Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 169-202.
    2. Ayzenberg, N. & Kiseleva, N. & Zorkaltsev, V., 2013. "Models of Imperfect Competition in Analysis of Siberian Electricity Market," Journal of the New Economic Association, New Economic Association, vol. 18(2), pages 62-88.
    3. David Newbery, 2008. "Predicting market power in wholesale electricity markets," Working Papers EPRG 0821, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    4. Alexander Vasin & Marina Dolmatova & Gerhard-Wilhelm Weber, 2016. "Supply function equilibria for uniform price auction in oligopolistic markets," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 24(4), pages 819-831, December.
    5. Holmberg, Pär & Newbery, David, 2010. "The supply function equilibrium and its policy implications for wholesale electricity auctions," Utilities Policy, Elsevier, vol. 18(4), pages 209-226, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:enp:wpaper:eprg0824. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ruth Newman (email available below). General contact details of provider: https://edirc.repec.org/data/jicamuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.