IDEAS home Printed from https://ideas.repec.org/a/eee/energy/v313y2024ics0360544224033693.html
   My bibliography  Save this article

Game-theoretic analysis of suppliers’ pricing power in thermal-electric local energy markets

Author

Listed:
  • Barbosa, Julia
  • Döllinger, Florian
  • Steinke, Florian

Abstract

The integration of renewable energy resources can be facilitated by local energy markets (LEMs) for multiple energy commodities. While multi-energy LEMs are designed to alleviate entry barriers for smaller players, the limited capacity and participant count within an LEM can cause imperfect competition. This study formulates a Nash–Cournot game to analyze the market power of local suppliers in a thermal-electric LEM. By comparing the prices and welfare outcomes of a perfectly competitive market with those of an oligopolistic market, we highlight the impact of the number and mix of market participants on the distribution of social welfare and market efficiency. Additionally, we introduce and assess two strategies aimed at mitigating the supplier’s market power. Based on simulations of a LEM with demand and installed capacity similar to that of a large German city, we show that LEM should not be assumed to be perfectly competitive, as the strategic behavior of supplier agents significantly affects the market outcome. Our analyzed mitigation strategies exhibit the potential to curtail suppliers’ market power, redistribute social welfare, and contribute to more balanced market dynamics.

Suggested Citation

  • Barbosa, Julia & Döllinger, Florian & Steinke, Florian, 2024. "Game-theoretic analysis of suppliers’ pricing power in thermal-electric local energy markets," Energy, Elsevier, vol. 313(C).
    • Handle: RePEc:eee:energy:v:313:y:2024:i:c:s0360544224033693
    DOI: 10.1016/j.energy.2024.133591
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0360544224033693
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.energy.2024.133591?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:energy:v:313:y:2024:i:c:s0360544224033693. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.