Efficient determination of Cournot equilibria in electricity markets

This paper analyzes the deregulated electricity market using game theory and investigates the properties of Cournot equilibrium points. A new algorithm for the calculation of the Cournot equilibrium of an electricity market in the absence of transmission constraints is presented. The algorithm is based on the transformation of the Cournot game into a three level decision-making scheme with economic signal exchange. The algorithm is tested on a hypothetical market in order to demonstrate the effects of market concentration and demand elasticity. Case studies indicate that the algorithm is very efficient computationally and therefore suitable for use with multi-period production scheduling models for the electricity market.