A Proposal for Inverse Demand Curve Production of Cournot Model for Application to the Electricity Market

  • Kang Dong-Joo (Group of Electricity Market Technology Research, KERI) ;
  • Oh Tae-Kyoo (Group of Electricity Market Technology Research, KERI) ;
  • Chung Koohyung (Dept. of Electrical and Electronic Engineering, Hongik University) ;
  • Kim Balho H. (Dept. of Electrical and Electronic Engineering, Hongik University)
  • 발행 : 2005.12.01

초록

At present, the Cournot model is one of the most commonly used theories to analyze the gaming situation in an oligopoly type market. However, several problems exist in the successful application of this model to the electricity market. The representative one is obtaining the inverse demand curve able to be induced from the relationship between market price and demand response. In the Cournot model, each player offers their generation quantity to obtain maximum profit, which is accomplished by reducing their quantity compared with available total capacity. As stated above, to obtain the probable Cournot equilibrium to reflect the real market situation, we have to induce the correct demand function first of all. Usually the correlation between price and demand appears over the long-term through statistical data analysis (for example, regression analysis) or by investigating consumer utility functions of several consumer groups classified as residential, industrial, and commercial. However, the elasticity has a tendency to change continuously according to the total market demand size or the level of market price. Therefore it should be updated as the trading period passes by. In this paper we propose a method for inducing and updating this price elasticity of demand function for more realistic market equilibrium.

키워드

참고문헌

  1. Young-se Kim, 'Game Theory,' Bak-Young-Sa, 1999
  2. Avinash Dixit & Susan Skeath, 'Games of Strategy,' Norton, 1999
  3. NECA, 'Australia National Electricity Code'
  4. National Institute of Economic and Industry Research, 'The price of elasticity of demand for electricity in NEM Regions,' NEMMCO (National Electricity Market Management Company, 2002
  5. Nam-il Kim, 'Government Role in Competitive Electricity Market,' KEEI (Korea Energy Economy Research Institute), 2001. 12
  6. Glenn Drayton, 'PLEXOS for Power Systems,' Drayton Analytics, 2004
  7. KERI (Korea Electro-technology Research Institute), 'A Study on the Possibility of Exercising Market Power and its Countermeasures in the TWBP,' MOCIE (Ministry of Commerce, Industry, and Energy), 2003.5