Oligarchic´s game equilibrium model in regional power markets with financial options

Based on non-cooperative game theory, a Stackelberg model is developed for two plants in regional power markets. The plants are in the game of two-period in options and spot markets. By the backward induction method, equilibrium quantity of power generate of them in the spot market and call options they sell in the options market are solved. Different impacts of the financial options between the Stackelberg model and Cournot model on the market equilibrium and plant´s bidding strategy are compared, and different impacts of the generating cost, strike price and spot price fluctuation on generators option trading strategy are analyzed. The results show that the financial options contracts promote the market competition to some extent, and the effect on power market according to Stackelberg model is greater than Cournot model, which provide a new idea for power to weaken monopolies and guide competition orderly.