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Analysis Technique on Collusive Bidding Incentives in a Competitive Generation Market  

Lee, Kwang-Ho (단국대 전기공학과)
Publication Information
The Transactions of the Korean Institute of Electrical Engineers A / v.55, no.6, 2006 , pp. 259-264 More about this Journal
Abstract
This paper addresses the collusive bidding that functions as a potential obstacle to a fully competitive wholesale electricity market. Cooperative game is formulated and the equation of its Nash Equilibrium (NE) is derived on the basis of the supply function model. Gencos' willingness to selectively collude is expressed through a bargain theory. A Collusion Incentive Index(CII) for representing the willingness is defined through computing the Gencos' profits at NE. In order to keep the market non-cooperative, the market operator has to know the highest potentially collusive combination among the Gencos. Another index, which will be called the Collusion Monitoring Index(CMI), is suggested to detect the highest potential collusion and it is calculated using the marginal cost functions of the Gencos without any computation of NE. The effectiveness of CMI for detecting the highest potential collusion is verified through application on many test market cases.
Keywords
Collusioin; Cooperative Game; Generation Bidding; Market Power; Nash Equilibrium;
Citations & Related Records
Times Cited By KSCI : 1  (Citation Analysis)
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