Analysis of competitive power market with constant elasticity function

A solution method, for competitive power markets formulated as a Cournot game, that allows equilibrium to be determined without an explicit model of aggregated demand is presented. The method determines market equilibrium for all feasible demand conditions and thus provides a perspective on the market, independent of representative demand function, that reveals the inherent tendencies of producers in the market. Numerical solutions are determined by use of the new controlled genetic algorithm and constraint handling techniques. The solutions give production and demand elasticity distributions of the market at any feasible equilibrium price and volume. The solution distributions evaluated for the market with unspecified demand functions, were found to be consistent with previous results obtained from markets with specific demand functions. The ability of the new approach to find all, and arbitrary, solutions allows specific markets to be examined, as well as very general observations to be made. Generally it was observed that: no inherent price constraint exists; price is more volatile for low volumes and high prices; market dominance and power are unaffected by price; and inelastic demand can give rise to equilibrium with lower price than responsive demand.