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A compensation-based pricing scheme in markets with non-convexities

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  • Izabela Żółtowska
  • Eugeniusz Toczyłowski

Abstract

A compensation-based pricing scheme is a market clearing mechanism that may be applied when a uniform, linear pricing scheme cannot support equilibrium allocations in the auction markets. We analyze extensions of our previously proposed pricing scheme [14] to include various possible representations of bids that reflect some non-convex costs and constraints. We conclude with a discussion on directions for future research.

Suggested Citation

  • Izabela Żółtowska & Eugeniusz Toczyłowski, 2009. "A compensation-based pricing scheme in markets with non-convexities," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 19(4), pages 125-140.
    • Handle: RePEc:wut:journl:v:4:y:2009:p:125-140:id:150
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    References listed on IDEAS

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    1. François Bouffard & Francisco D. Galiana, 2005. "Generalized Uplifts in Pool-Based Electricity Markets," Springer Books, in: El Kébir Boukas & Roland P. Malhamé (ed.), Analysis, Control and Optimization of Complex Dynamic Systems, chapter 0, pages 193-214, Springer.
    2. O'Neill, Richard P. & Sotkiewicz, Paul M. & Hobbs, Benjamin F. & Rothkopf, Michael H. & Stewart, William R., 2005. "Efficient market-clearing prices in markets with nonconvexities," European Journal of Operational Research, Elsevier, vol. 164(1), pages 269-285, July.
    3. Bjørndal, Mette & Jörnsten, Kurt, 2008. "Equilibrium prices supported by dual price functions in markets with non-convexities," European Journal of Operational Research, Elsevier, vol. 190(3), pages 768-789, November.
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    Cited by:

    1. Zoltowska, Izabela, 2016. "Demand shifting bids in energy auction with non-convexities and transmission constraints," Energy Economics, Elsevier, vol. 53(C), pages 17-27.

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