Nash equilibrium in a pay-as-bid electricity market Part 2 - best response of a producer |
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Authors: | D Aussel P Bendotti M Pištěk |
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Institution: | 1. Lab. PROMES UPR CNRS 8521, Université de Perpignan, Perpignan, France.aussel@univ-perp.fr;3. OSIRIS Department, EDF R&4. D, Clamart, France.;5. Regional Innovation Centre of Electrical Engineering, University of West Bohemia in Pilsen, Pilsen, Czech Republic. |
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Abstract: | We consider a multi-leader-common-follower model of a pay-as-bid electricity market in which the producers provide the regulator with either linear or quadratic bids. We prove that for a given producer only linear bids can maximize his profit. Such linear bids are referred as the ‘best response’ of the given producer. They are obtained assuming the demand is known and some estimate of the bids of the other producers is available. Nevertheless we also show that whenever no best response exists, the optimal profit can be asymptotically attained by a sequence of quadratic bids converging to the so-called ‘limiting best response’. An explicit formula for such a sequence is provided. |
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Keywords: | Electricity market multi-leader-follower game Nash equilibrium best response |
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