Evolutionary analysis of electricity markets based on gradual Cournot adjustment

This paper is based on the theory of learning in games and according to the automata network modeling method of a complex system. We try to probes into the essential problem in electricity markets. The game analysis of the optimal pricing model is carried out in the paper, with the gradual Cournot adjustment model designed. Then we simulate the Cournot adjustment in combination with typical cases to reveal those possible causes leading to instability of electricity markets. Starting from the survival environment of a single generation company, it also introduces the concept of competitor environment constraint curve, analyzes the relationship between the generator´s controllable price intervals and market power, puts forward the concept of information feedback loop of market power, carries out analysis of the generator´s survival environment under the complete information structure and discusses the evolutionary mechanism of the electricity market under an incomplete information structure. At last, the article arrive at the conclusion that the market power strengthens gradually through the information feedback loop and may cause the instability of the market.