The role of a market maker in networked cournot competition

Bose, Subhonmesh; Cai, Desmond; Low, Steven H.; Wierman, Adam

doi:10.1109/cdc.2014.7040088

Cited by 40 publications

(24 citation statements)

References 32 publications

(47 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Due to the importance of the ISO in electricity markets, papers within this literature often include a model of a market maker, e.g., [12,22,26,34,54,56,58]. Our model builds on and generalizes the models for market makers and network competition in this literature.…”

Section: Related Literaturementioning

confidence: 99%

On the Role of a Market Maker in Networked Cournot Competition

2019

Self Cite

View full text Add to dashboard Cite

We study Cournot competition among firms in a networked marketplace that is centrally managed by a market maker. In particular, we study a situation in which a market maker facilitates trade between geographically separate markets via a constrained transport network. Our focus is on understanding the consequences of the design of the market maker and on providing tools for optimal design. To that end we provide a characterization of the equilibrium outcomes of the game between the firms and the market maker. Our results highlight that the equilibrium structure is impacted dramatically by the market maker's objective -depending on the objective there may be a unique equilibrium, multiple equilibria, or no equilibria. Further, the game may be a potential game (as in the case of classical Cournot competition) or not. Beyond characterizing the equilibria of the game, we provide an approach for designing the market maker in order to optimize a design objective (e.g., social welfare) at the equilibrium of the game. Additionally, we use our results to explore the value of transport (trade) and the efficiency of the market maker (as compared to a single, aggregate market).

show abstract

Section: Related Literaturementioning

confidence: 99%

On the Role of a Market Maker in Networked Cournot Competition

2019

Self Cite

View full text Add to dashboard Cite

show abstract

“…Our paper fits squarely into the emerging literature on networked Cournot competition. The model of networked competition we study has been considered previously, beginning with [28] and continuing through [22,8,9,29,10,11,12]. The contribution of our work comes in two forms.…”

Section: Competition In Networked Settingsmentioning

confidence: 99%

Temporally Networked Cournot Platform Markets

Pang¹,

You²,

Chen³

2018

Proceedings of the 51st Hawaii International Conference on System Sciences

View full text Add to dashboard Cite

In networked markets, information can help firms make better decisions on which market (platform), and how much, to participate. However, these markets may be temporally separated, e.g., independent system operators in different geographical locations. We model these via networked Cournot markets, but instead consider the participation of one firm to either be with the realization (or full information) of a random market, or only with the statistics of the random market, modeled by an additive zero-mean random variable on the maximal price. We show that firms not knowing the realization of the random variable would participate in both markets in the same way as if the mean was realized. We then present global effects: we prove that profit is improved for every firm when one's information improves but social welfare may get better or worst with more information.

show abstract

“…In an effort to address such difficulties in analysis, there has emerged another stream of literature that resorts to the so-called networked Cournot model to characterize the strategic interaction between producers in constrained transmission networks. We refer the reader to [28], [29], [30], [31], [32], [33], [34], [35], [36], [37], [38] for recent advances.…”

Section: Introductionmentioning

confidence: 99%

A Structural Characterization of Market Power in Electric Power Networks

Lin

Bitar

2020

IEEE Trans. Netw. Sci. Eng.

View full text Add to dashboard Cite

We consider a market in which capacity-constrained generators compete in scalar-parameterized supply functions to serve an inelastic demand spread throughout a transmission constrained power network. The market clears according to a locational marginal pricing mechanism, in which the independent system operator (ISO) determines the generators' production quantities to minimize the revealed cost of meeting demand, while ensuring that network transmission and generator capacity constraints are met. Under the stylizing assumption that both the ISO and generators choose their strategies simultaneously, we establish the existence of Nash equilibria for the underlying market, and derive an upper bound on the allocative efficiency loss at Nash equilibrium relative to the socially optimal level. We also characterize an upper bound on the markup of locational marginal prices at Nash equilibrium above their perfectly competitive levels. Of particular relevance to ex ante market power monitoring, these bounds reveal the role of certain market structures-specifically, the market share and residual supply index of a producer-in predicting the degree to which that producer is able to exercise market power to influence the market outcome to its advantage. Finally, restricting our attention to the simpler setting of a two-node power network, we provide a characterization of market structures under which a Braess-like paradox occurs due to the exercise of market power-that is to say, we provide a necessary and sufficient condition on market structure under which the strengthening of the network's transmission line capacity results in the (counterintuitive) increase in the total cost of generation at Nash equilibrium.

show abstract

The role of a market maker in networked cournot competition

Cited by 40 publications

References 32 publications

On the Role of a Market Maker in Networked Cournot Competition

On the Role of a Market Maker in Networked Cournot Competition

Temporally Networked Cournot Platform Markets

A Structural Characterization of Market Power in Electric Power Networks

Contact Info

Product

Resources

About