Repository logo
 

Supply function equilibria in transportation networks


Type

Working Paper

Change log

Authors

Holmberg, P. 
Philpott, A. 

Abstract

Transport constraints limit competition and arbitrageurs' possibilities of exploiting price differences between commodities in neighbouring markets. We analyze a transportation network where oligopoly producers compete with supply functions under uncertain demand, as in wholesale electricity markets. For symmetric networks with a radial structure, we show that existence of symmetric supply function equilibria (SFE) is ensured if demand shocks are sufficiently evenly distributed. We can explicitly solve for them for uniform multi-dimensional nodal demand shocks.

Description

Keywords

Supply Function Equilibrium, Trading network, Transmission network, Wholesale electricity markets

Is Part Of

Publisher

Faculty of Economics

Publisher DOI

Publisher URL