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Mathematical Modelling for Time-of-Use Pricing of Electricity in Monopoly and Oligopoly

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  • Kaicker, Nidhi
  • Dutta, Goutam
  • Das, Debamanyu
  • Banerjee, Subhashree

Abstract

This study establishes the feasibility condition for efficiency gains to arise from time-of-use pricing in the electricity market in a monopolistic and oligopolistic set up using constrained optimization. In an oligopolistic set-up, the strategic interaction between producers depends on the level of demand. In case of high demand, the producers compete on the basis of output they will produce, resulting in a Cournot-type competition. On the other hand, in case of low demand, an oligopolistic structure may break with only the most efficient firm operating, or results in the emergence of leader firms and follower firms, i.e. the Stackleberg model.

Suggested Citation

  • Kaicker, Nidhi & Dutta, Goutam & Das, Debamanyu & Banerjee, Subhashree, 2017. "Mathematical Modelling for Time-of-Use Pricing of Electricity in Monopoly and Oligopoly," IIMA Working Papers WP 2017-10-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    • Handle: RePEc:iim:iimawp:14580
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    References listed on IDEAS

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