Stability of supply function equilibria implications for daily versus hourly bids in a poolco market
Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the w...
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| Autor*in: |
Baldick, Ross [verfasserIn] |
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| Format: |
Artikel |
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| Sprache: |
Englisch |
| Erschienen: |
2006 |
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| Schlagwörter: |
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| Anmerkung: |
© Springer Science+Business Media, LLC 2006 |
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| Übergeordnetes Werk: |
Enthalten in: Journal of regulatory economics - Kluwer Academic Publishers, 1989, 30(2006), 2 vom: Aug., Seite 119-139 |
|---|---|
| Übergeordnetes Werk: |
volume:30 ; year:2006 ; number:2 ; month:08 ; pages:119-139 |
| Links: |
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| DOI / URN: |
10.1007/s11149-006-0017-2 |
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OLC204894017X |
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| 520 | |a Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. | ||
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10.1007/s11149-006-0017-2 doi (DE-627)OLC204894017X (DE-He213)s11149-006-0017-2-p DE-627 ger DE-627 rakwb eng 330 VZ Baldick, Ross verfasserin aut Stability of supply function equilibria implications for daily versus hourly bids in a poolco market 2006 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier © Springer Science+Business Media, LLC 2006 Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. Stability of equilibrium Oligopoly models Electricity markets Supply function equilibrium Hogan, William W. aut Enthalten in Journal of regulatory economics Kluwer Academic Publishers, 1989 30(2006), 2 vom: Aug., Seite 119-139 (DE-627)170221695 (DE-600)1027173-9 (DE-576)023101695 0922-680X nnns volume:30 year:2006 number:2 month:08 pages:119-139 https://doi.org/10.1007/s11149-006-0017-2 lizenzpflichtig Volltext GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_31 GBV_ILN_2004 GBV_ILN_2012 GBV_ILN_4012 GBV_ILN_4029 GBV_ILN_4193 GBV_ILN_4311 GBV_ILN_4318 GBV_ILN_4700 AR 30 2006 2 08 119-139 |
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10.1007/s11149-006-0017-2 doi (DE-627)OLC204894017X (DE-He213)s11149-006-0017-2-p DE-627 ger DE-627 rakwb eng 330 VZ Baldick, Ross verfasserin aut Stability of supply function equilibria implications for daily versus hourly bids in a poolco market 2006 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier © Springer Science+Business Media, LLC 2006 Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. Stability of equilibrium Oligopoly models Electricity markets Supply function equilibrium Hogan, William W. aut Enthalten in Journal of regulatory economics Kluwer Academic Publishers, 1989 30(2006), 2 vom: Aug., Seite 119-139 (DE-627)170221695 (DE-600)1027173-9 (DE-576)023101695 0922-680X nnns volume:30 year:2006 number:2 month:08 pages:119-139 https://doi.org/10.1007/s11149-006-0017-2 lizenzpflichtig Volltext GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_31 GBV_ILN_2004 GBV_ILN_2012 GBV_ILN_4012 GBV_ILN_4029 GBV_ILN_4193 GBV_ILN_4311 GBV_ILN_4318 GBV_ILN_4700 AR 30 2006 2 08 119-139 |
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10.1007/s11149-006-0017-2 doi (DE-627)OLC204894017X (DE-He213)s11149-006-0017-2-p DE-627 ger DE-627 rakwb eng 330 VZ Baldick, Ross verfasserin aut Stability of supply function equilibria implications for daily versus hourly bids in a poolco market 2006 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier © Springer Science+Business Media, LLC 2006 Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. Stability of equilibrium Oligopoly models Electricity markets Supply function equilibrium Hogan, William W. aut Enthalten in Journal of regulatory economics Kluwer Academic Publishers, 1989 30(2006), 2 vom: Aug., Seite 119-139 (DE-627)170221695 (DE-600)1027173-9 (DE-576)023101695 0922-680X nnns volume:30 year:2006 number:2 month:08 pages:119-139 https://doi.org/10.1007/s11149-006-0017-2 lizenzpflichtig Volltext GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_31 GBV_ILN_2004 GBV_ILN_2012 GBV_ILN_4012 GBV_ILN_4029 GBV_ILN_4193 GBV_ILN_4311 GBV_ILN_4318 GBV_ILN_4700 AR 30 2006 2 08 119-139 |
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10.1007/s11149-006-0017-2 doi (DE-627)OLC204894017X (DE-He213)s11149-006-0017-2-p DE-627 ger DE-627 rakwb eng 330 VZ Baldick, Ross verfasserin aut Stability of supply function equilibria implications for daily versus hourly bids in a poolco market 2006 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier © Springer Science+Business Media, LLC 2006 Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. Stability of equilibrium Oligopoly models Electricity markets Supply function equilibrium Hogan, William W. aut Enthalten in Journal of regulatory economics Kluwer Academic Publishers, 1989 30(2006), 2 vom: Aug., Seite 119-139 (DE-627)170221695 (DE-600)1027173-9 (DE-576)023101695 0922-680X nnns volume:30 year:2006 number:2 month:08 pages:119-139 https://doi.org/10.1007/s11149-006-0017-2 lizenzpflichtig Volltext GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_31 GBV_ILN_2004 GBV_ILN_2012 GBV_ILN_4012 GBV_ILN_4029 GBV_ILN_4193 GBV_ILN_4311 GBV_ILN_4318 GBV_ILN_4700 AR 30 2006 2 08 119-139 |
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10.1007/s11149-006-0017-2 doi (DE-627)OLC204894017X (DE-He213)s11149-006-0017-2-p DE-627 ger DE-627 rakwb eng 330 VZ Baldick, Ross verfasserin aut Stability of supply function equilibria implications for daily versus hourly bids in a poolco market 2006 Text txt rdacontent ohne Hilfsmittel zu benutzen n rdamedia Band nc rdacarrier © Springer Science+Business Media, LLC 2006 Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. Stability of equilibrium Oligopoly models Electricity markets Supply function equilibrium Hogan, William W. aut Enthalten in Journal of regulatory economics Kluwer Academic Publishers, 1989 30(2006), 2 vom: Aug., Seite 119-139 (DE-627)170221695 (DE-600)1027173-9 (DE-576)023101695 0922-680X nnns volume:30 year:2006 number:2 month:08 pages:119-139 https://doi.org/10.1007/s11149-006-0017-2 lizenzpflichtig Volltext GBV_USEFLAG_A SYSFLAG_A GBV_OLC SSG-OLC-WIW GBV_ILN_26 GBV_ILN_31 GBV_ILN_2004 GBV_ILN_2012 GBV_ILN_4012 GBV_ILN_4029 GBV_ILN_4193 GBV_ILN_4311 GBV_ILN_4318 GBV_ILN_4700 AR 30 2006 2 08 119-139 |
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Stability of supply function equilibria implications for daily versus hourly bids in a poolco market |
| abstract |
Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. © Springer Science+Business Media, LLC 2006 |
| abstractGer |
Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. © Springer Science+Business Media, LLC 2006 |
| abstract_unstemmed |
Abstract We consider a supply function model of a poolco electricity market where demand varies significantly over a time horizon such as a day and also has a small responsiveness to price. Although there are equilibria yielding prices at peak that are close to Cournot prices, it is known that the wider the range of demand uncertainty the narrower the range of such supply function equilibria. Here we show that such equilibria are also typically unstable and consequently would be difficult to sustain in practice. This strengthens the results of Green and Newbery by ruling out many equilibria that have high prices. We demonstrate this result both theoretically under somewhat restrictive assumptions and also numerically using both a three-firm example system and a five-firm example system having generation capacity constraints. Hence, this reinforces the conclusion that the market outcome is significantly influenced by a requirement that offers into the poolco be consistent over the time horizon. This result contrasts with markets where bids can be changed on an hourly basis, where Cournot prices are possible outcomes. The stability analysis has important policy implications for the design of day-ahead electricity markets. The stability perspective also provides a narrowing of the equilibrium selection that strengthens empirical analysis. © Springer Science+Business Media, LLC 2006 |
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| container_issue |
2 |
| title_short |
Stability of supply function equilibria implications for daily versus hourly bids in a poolco market |
| url |
https://doi.org/10.1007/s11149-006-0017-2 |
| remote_bool |
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| author2 |
Hogan, William W. |
| author2Str |
Hogan, William W. |
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| doi_str |
10.1007/s11149-006-0017-2 |
| up_date |
2024-07-03T20:50:28.276Z |
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