2018

On Supply-Function Equilibria in Radial Transmission Networks

Reprint No. 2018:71

Author(s): Pär Holmberg and Andrew PhilpottYear: 2018 Title: European Journal of Operational Research Volume (No.): 271 (3) Pages: 985–1000
Online article (restrictions may apply)

On Supply-Function Equilibria in Radial Transmission Networks Pär Holmberg and 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.


Reference:
Holmberg, Pär and Andrew Philpott (2018), "On Supply-Function Equilibria in Radial Transmission Networks". European Journal of Operational Research 271(3), 985–1000.

Pär Holmberg

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