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The role of a market maker in networked Cournot competition

Bose, Subhonmesh and Cai, Desmond W. H. and Low, Steven H. and Wierman, Adam (2014) The role of a market maker in networked Cournot competition. In: 53rd IEEE Annual Conference on Decision and Control. IEEE , Piscataway, NJ, pp. 4479-4484. ISBN 978-1-4799-7746-8.

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We study the role of a market maker (or market operator) in a transmission constrained electricity market. We model the market as a one-shot networked Cournot competition where generators supply quantity bids and load serving entities provide downward sloping inverse demand functions. This mimics the operation of a spot market in a deregulated market structure. In this paper, we focus on possible mechanisms employed by the market maker to balance demand and supply. In particular, we consider three candidate objective functions that the market maker optimizes - social welfare, residual social welfare, and consumer surplus. We characterize the existence of Generalized Nash Equilibrium (GNE) in this setting and demonstrate that market outcomes at equilibrium can be very different under the candidate objective functions.

Item Type:Book Section
Related URLs:
URLURL TypeDescription Paper Paper
Bose, Subhonmesh0000-0002-3445-4479
Cai, Desmond W. H.0000-0001-9207-1890
Low, Steven H.0000-0001-6476-3048
Alternate Title:On the Role of a Market Maker in Networked Cournot Competition
Additional Information:© 2014 IEEE. Supported by: NSF through NetSE CNS 0911041, ARPA-E through GENI DE-AR0000226, EPAS-1307794, Southern California Edison, the National Science Council of Taiwan through NSC 103-3113-P-008-001, the Los Alamos National Lab (DoE), and Caltech’s Resnick Institute.
Group:Resnick Sustainability Institute
Funding AgencyGrant Number
Southern California EdisonUNSPECIFIED
National Science Council (Taipei)NSC 103-3113-P-008-001
Los Alamos National LaboratoryUNSPECIFIED
Resnick Sustainability InstituteUNSPECIFIED
Subject Keywords:Generators, Electricity supply industry, Vectors, Games, Mathematical model, Nash equilibrium, Pricing
Record Number:CaltechAUTHORS:20170810-101313051
Persistent URL:
Official Citation:S. Bose, D. W. H. Cai, S. Low and A. Wierman, "The role of a market maker in networked cournot competition," 53rd IEEE Conference on Decision and Control, Los Angeles, CA, 2014, pp. 4479-4484. doi: 10.1109/CDC.2014.7040088 URL:
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:80072
Deposited By: Linqi Guo
Deposited On:14 Aug 2017 20:08
Last Modified:15 Nov 2021 17:52

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