Bilateral transaction bargaining between independent utilities under incomplete information

A new approach to designing bilateral power transaction bargaining models between two independent utilities in a deregulated electricity market is proposed. In the paper it is assumed that each utility (a seller or a buyer) knows its own operating costs but does not know those of its opponent. The bilateral power transaction problem is then considered as nonco-operative bargaining under incomplete information. Each participant develops its own bargaining strategy based on estimates of the opponent´s operating costs and bargaining strategy. Two bargaining models are developed and examples are employed for demonstration