[...]... constraints that may provide additional possibilities of market power arising that are very specific of this in electricity markets [52, 55] According to the classification of the strategic variables, there are three types of game models which are bidding in price, bidding in quantity and supply function bidding models The price bidding models include Bertrand and Forchheimer models However, taking into... strategic bidding impacts The key point in formulating the game models to represent the strategic bidding behavior is a bi-level programming problem where the market clearing is inserted, as subject conditions, into the individual Producer Surplus Maximization (PSM) problem [11, 24–26, 49] The market clearing is to maximize the system surplus taking into account the physical constraints of electricity networks. .. the peculiarities of the electricity transmission, the transactions must be settled according to the physical conditions of the electricity network and different nodal prices may arise when the flow limits are binding In addressing the network features of the electricity transactions, the DC power flow model is popularly employed in studying the strategic interactions in the competitive electricity markets... Modeling Strategic Bidding Under Network Constraints in Pool Model The analysis of strategic bidding behaviors seeks to answer basic questions; including how a firm exercises strategic biddings and to what extent the strategic bidding behavior affects equilibrium quantities, prices, and market efficiency Such assessment, at least implicitly, requires a comparison of observations of real world market prices... provided Keywords Electricity markets • Game theory • Network constraints • Strategic bidding 1 Introduction The electric power industry has over the years been dominated by large state-owned monopolies that had an overall authority over all the activities in generation, transmission and distribution of power within their jurisdiction Chile is often considered as the first Country to introduce liberalization... derive the oligopoly equilibrium at which each individual electricity supplier’s optimal strategy is established Although to obtain the market clearing results at oligopoly equilibrium is straightforward by inserting the optimal strategy of each electricity producer into the market clearing model (3) and (4), to derive the equilibrium of optimal strategies of the electricity suppliers is a complex problem... elasticity plays a positive contribution in mitigating the strategic bidding behaviors, pushing the uncompetitive electricity market performance towards to a high level competitive one [49] 3.2 Market Equilibrium A market is a real or virtual environment in which buyers and sellers interact to exchange goods, services or commodities; the outcome of a market, from a macroscopic viewpoint is the quantity... is operated in its normal state The inequality constraints are satisfied with certain security margins in terms of generation spinning reserve and/or transmission capacity reserve, etc If the reserve margin, due to some disturbances, is reduced, the system enters into the alert state in which the constraints are still satisfied Preventive control then takes place to secure again proper security margins... among individuals aware that the behaviour of their competitors can Models of Strategic Bidding in Electricity Markets 23 affect their results in the market Market power analysis in terms of the strategic bidding behaviours can be gained from the use of game-theoretic models through simulating the competition between a given set of competitors in a well-specified market environment, taking into account... coincide with the Independent System Operator (ISO), to match demand and supply In the pool models the dispatching of injected and withdrawn power quantities are assigned considering the transmission limits and providing, as a by-product, the locational marginal prices (LMPs), such as in PJM Interconnection, in order to capture the network impacts on the market clearing [40] Models of Strategic Bidding . overall authority over all the activities in generation, transmission and distribution of power within their jurisdiction. Chil e is often considered as the. Ramos Differentiated Reliability Pricing Model for Customers of Distribution Grids 213 Arturas Klementavicius and Virginijus Radzi ukynas Compromise Scheduling of Bilateral