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Supply function equilibria for uniform price auction in oligopolistic markets

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Abstract

We consider game-theoretic models related to the supply function auction for electricity markets. We determine the set of supply function equilibria (SFE), introduced by Klemperer and Mayer (Econometrica 57:1243–1277, 1989), for a symmetric oligopoly with linear demand, fixed marginal cost and capacity constraint. This set depends on the maximum random shock of the demand function. We also study the best response dynamics and show that in general it does not converge to any SFE. We find out sufficient conditions for the convergence and conclude on the optimal parameters of the auction.

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Authors and Affiliations

  1. Faculty of Computational Mathematics and Cybernetics, Lomonosov Moscow State University, 119991 , Moscow, Russia

    Alexander Vasin & Marina Dolmatova

  2. Institute of Applied Mathematics, Middle East Technical University, Ankara, Turkey

    Gerhard-Wilhelm Weber

Authors
  1. Alexander Vasin
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  2. Marina Dolmatova
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  3. Gerhard-Wilhelm Weber
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Corresponding author

Correspondence to Marina Dolmatova.

Additional information

The research was supported by Russian Foundation for Basic Research, Project 14-01-91163\14. The results were partially reported at IFORS 2014 (Dolmatova and Vasin 2014). We thank the participants of Optimal Design in Environmental Management session for useful discussion.

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Vasin, A., Dolmatova, M. & Weber, GW. Supply function equilibria for uniform price auction in oligopolistic markets. Cent Eur J Oper Res 24, 819–831 (2016). https://doi.org/10.1007/s10100-015-0390-y

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  • DOI: https://doi.org/10.1007/s10100-015-0390-y

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