Dynamic price discrimination in demand response market: A bilevel game theoretical model

Ding Xiang, Ermin Wei

Research output: Chapter in Book/Report/Conference proceedingConference contribution

1 Scopus citations

Abstract

As opposed to the traditional supply-follow-demand approach, demand response is seen as an effective solution to improve efficiency of electricity system. In demand response, dynamic pricing schemes are believed to have significant potential to fully exploit the flexibility of shiftable energy consumptions. Most existing work on dynamic pricing schemes, however, falls short on consideration of price discrimination over different types of consumer groups. In this work, we propose a bilevel game theoretical Stackelberg model between a price-making utility company (a leader) and price-taking consumer groups (followers) in a discriminated dynamic pricing environment. We show under price discrimination producer surplus is monotonically increasing as energy consumption capacity of consumer groups increases. Numerical simulation validates our theoretical analysis and also shows that without price discrimination the social welfare may decrease against the energy consumption capacity of consumer groups. Moreover, social welfare can be higher under price discrimination.

Original languageEnglish (US)
Title of host publication2018 IEEE Global Conference on Signal and Information Processing, GlobalSIP 2018 - Proceedings
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages951-955
Number of pages5
ISBN (Electronic)9781728112954
DOIs
StatePublished - Feb 20 2019
Event2018 IEEE Global Conference on Signal and Information Processing, GlobalSIP 2018 - Anaheim, United States
Duration: Nov 26 2018Nov 29 2018

Publication series

Name2018 IEEE Global Conference on Signal and Information Processing, GlobalSIP 2018 - Proceedings

Conference

Conference2018 IEEE Global Conference on Signal and Information Processing, GlobalSIP 2018
CountryUnited States
CityAnaheim
Period11/26/1811/29/18

Keywords

  • Bilevel programming
  • Demand response
  • Dynamic price
  • Price discrimination
  • Stackelberg game

ASJC Scopus subject areas

  • Information Systems
  • Signal Processing

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