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European Journal of Operational Research

On Supply–Function Equilibria in Radial Transmission Networks

Scientific Article in English
Reference
Holmberg, Pär and Andrew Philpott (2018). “On Supply–Function Equilibria in Radial Transmission Networks”. European Journal of Operational Research 271(3), 985–1000. doi.org/10.1016/j.ejor.2018.05.070

Authors
Pär Holmberg, Andrew Philpott

Transmission constraints limit competition and arbitrageurs’ possibilities of exploiting price differences between commodities in neighbouring markets. We analyze radial transmission-constrained networks with local demand shocks, where spatially distributed oligopoly producers compete with supply functions, as in wholesale electricity markets. We prove existence and uniqueness of supply-function equilibrium in two-node networks, and we are able to explicitly solve for symmetric supply-function equilibria in two-node and star networks.

Pär Holmberg

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