Efficiency of supply function equilibrium in networked markets

Yuanzhang Xiao, Chaithanya Bandi, Ermin Wei

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

1 Scopus citations

Abstract

Motivated by the deregulation of electricity market, we study the efficiency loss of the supply function equilibrium (SFE). Specifically, we consider a market where the demand is inelastic, the suppliers submit their supply functions, and a uniform price is set to clear the market. Existing literature has answers to this question without regard to the network structure of the market. However, in many markets (such as electricity markets), there is an underlying physical network that limits the market operations (e.g., in electricity markets, the transmission network determines how electricity flows through the network and thus puts constraints on the supply profile). Motivated by electricity markets, we study how network topology affects the efficiency of SFE. For general mesh networks, we show that the efficiency loss is upper bounded as in the case without networks. Interestingly, we find a class of radial networks, for which the efficiency loss is independent of the local network topology.

Original languageEnglish (US)
Title of host publication2015 53rd Annual Allerton Conference on Communication, Control, and Computing, Allerton 2015
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages733-735
Number of pages3
ISBN (Electronic)9781509018239
DOIs
StatePublished - Apr 4 2016
Event53rd Annual Allerton Conference on Communication, Control, and Computing, Allerton 2015 - Monticello, United States
Duration: Sep 29 2015Oct 2 2015

Publication series

Name2015 53rd Annual Allerton Conference on Communication, Control, and Computing, Allerton 2015

Other

Other53rd Annual Allerton Conference on Communication, Control, and Computing, Allerton 2015
CountryUnited States
CityMonticello
Period9/29/1510/2/15

ASJC Scopus subject areas

  • Computer Networks and Communications
  • Computer Science Applications
  • Control and Systems Engineering

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