Finding Multiple Equilibria for Raiffa–Kalai–Smorodinsky and Nash Bargaining Equilibria in Electricity Markets: A Bilateral Contract Model

Garcia, Reinaldo C.; Contreras, Javier; Macedo, Bárbara Caldeira; Monteiro, Daniel da Silva; Barbosa, Matheus L.

doi:10.3390/designs5010003

Cited by 2 publications

(1 citation statement)

References 35 publications

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“…In the primary-secondary game problem, the payoff optimization problem of the game participants at each level is a nonlinear optimization problem, and it is known from the nonlinear programming theory that the necessary condition for the solution of a nonlinear optimization problem is the Karush-Kuhn-Tucker (KKT) condition; therefore, the solution of a nonlinear optimization problem can be obtained by solving the KKT condition of that nonlinear optimization problem [28]. The KKT condition consists of the constraints of the original lower-level problem, the constraints of the dual problem, the complementary relaxation condition, and the gradient of the Lagrangian function [29]. Thus, optimization can be achieved using KKT conditions.…”

Section: Measurement Of the Double Game Modelmentioning

confidence: 99%

Construction and Application of the Double Game Model for Direct Purchase of Electricity by Large Consumers under Consideration of Risk Factors

Yu,

Zhang,

Cui

et al. 2024

Energies

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With the development of global clean energy and the implementation of carbon emission reduction policies, the direct purchase of electricity by large consumers has been increasingly promoted as a special form of electricity trading. Therefore, on the basis of the completion of low-carbon emission reduction targets in each country, how to rationalize the electricity purchase by large consumers in the electricity market so as to reduce their electricity purchase costs has become the main target of attention in each country. Currently, there are fewer studies in existing research on the direct electricity purchase strategy of large consumers under the consideration of the weight of consumption responsibility and risk. Based on this, this paper constructs a dual-game model for direct electricity purchase by large consumers based on the Stackelberg game and non-cooperative game theory. The concept of value at risk is further introduced, and the optimal strategy of direct electricity purchase by large consumers is proposed. The results of this study show that when market players make decisions on the purchase and sale of electricity, power suppliers will increase their biddings to obtain the highest returns, and large consumers can reduce the transaction costs by combining the medium- and long-term market with the spot market to purchase electricity. In the choice of electricity purchase market, with the increasing risk factor, large consumers shift from the risky spot market to the less risky medium- and long-term market and option market. This paper provides a reference for the issues of power suppliers’ contract bidding and large consumers’ electricity purchase strategy in the medium- and long-term contract transactions.

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Section: Measurement Of the Double Game Modelmentioning

confidence: 99%

Construction and Application of the Double Game Model for Direct Purchase of Electricity by Large Consumers under Consideration of Risk Factors

Yu,

Zhang,

Cui

et al. 2024

Energies

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Negotiations in Competing Supply Chains: The Kalai-Smorodinsky Bargaining Solution

Feng

Shanthikumar

2022

Management Science

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Supply chain contract negotiation has gained increasing attention in recent years, and the studies involving negotiations in the operations literature almost exclusively apply the concept of the Nash bargaining (NB) solution. The NB solution, however, is derived based on the axiom of independence of irrelevant alternatives (IIA), an unrealistic assumption in many contexts. Indeed, our analysis suggests that the NB solution can lead to unreasonable negotiation outcomes in supply chains with horizontal competition. As an alternative, the Kalai-Smorodinsky (KS) solution has been applied in many fields but has not been introduced to the supply chain contexts. The KS solution is derived under the axiom of individual monotonicity in replacement of the IIA axiom. We perform a comprehensive comparison of contract negotiations under the KS and NB solutions in horizontally competing supply chains. Although the KS solution does not possess the flexibility of explicitly specifying the relative bargaining power as the NB solution does, the KS solution can appropriately capture the negotiation power shift induced by the decision ownership, the negotiation sequence, the vertical relationship, the competition intensity, the trade contingency, and the contract type. Our study sheds lights on the appropriate selection of solution concepts in studying negotiations in competing supply chains. This paper was accepted by David Simchi-Levi, operations management.

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Finding Multiple Equilibria for Raiffa–Kalai–Smorodinsky and Nash Bargaining Equilibria in Electricity Markets: A Bilateral Contract Model

Cited by 2 publications

References 35 publications

Construction and Application of the Double Game Model for Direct Purchase of Electricity by Large Consumers under Consideration of Risk Factors

Construction and Application of the Double Game Model for Direct Purchase of Electricity by Large Consumers under Consideration of Risk Factors

Negotiations in Competing Supply Chains: The Kalai-Smorodinsky Bargaining Solution

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