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Working Paper No. 945

Supply Function Equilibria in Networks with Transport Constraints

Working Paper
Holmberg, Pär and Andrew Philpott (2012). “Supply Function Equilibria in Networks with Transport Constraints ”. IFN Working Paper No. 945. Stockholm: Research Institute of Industrial Economics (IFN).

Pär Holmberg, Andrew Philpott

Transport constraints limit competition and arbitrageurs.possibilities of exploiting price differences between commodities in neighbouring markets. We analyze a transport-constrained network with local demand shocks, where spatially distributed oligopoly producers compete with supply functions, as in wholesale electricity markets. Uniqueness and existence results are proven, and we are able to explicitly solve for symmetric supply-function equilibria in some special cases.

Pär Holmberg

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