Competition in the British Electricity Spot Market

Mixed Strategies in Discriminatory Divisible-Good Auctions

“…Now, we assume that costs are common knowledge and that demand is uncertain; a standard assumption for electricity auctions [12]. Supply function equilibria in the pay-as-bid auction, have been studied in the context of electricity markets by Holmberg [13].…”

“…We consider a situation in which producer j 6 = i offers its capacity at a price p or below with probability G j (p). From (12) we have the resulting market distribution function of firm i.…”

“…Choose γ > 0 with γ < D(p) − D(e p) and write ∆ = e p − p. Now G (t, p) = 1 for t < q L j (p). Hence, from (12) for q ≥ ε + D (p) − q L j (p),…”

Strategic bidding in electricity pools with short-lived bids: an application to the Spanish market

“…In a seminal paper, Green and Newbery (1992) analyze the behavior of firm in the England and Wales electricity pool. These authors assume that firm have a continuously differentiable cost function and submit continuously differentiable bid functions to the pool and apply Klemperer and Meyer's (1989) results to obtain a range of equilibrium supply functions.…”

“…When comparing our results with those derived from the Cournot model, we observe that Cournot yields significantl higher mark-ups except when demand is very elastic or the industry is 4S everal justification are given in Borenstein and Bushnell (1999) and Ocana and Romero (1998) as to why the Cournot model could be a good approximation to fir behavior in the pool. First, Green and Newbery (1992) show that Cournot is an upper bound to prices in their model of the England and Wales pool. It must be noted that, in their model, prices only reach the Cournot level when demand is highest, and can be considerably below on average.…”