TY - JOUR

T1 - Transmission system augmentation based on the concepts of quantity withheld and monopoly rent for reducing market power

AU - Hesamzadeh, Mohammad R.

AU - Hosseinzadeh, Nasser

AU - Wolfs, Peter J.

PY - 2010/2

Y1 - 2010/2

N2 - This paper proposes two mathematical structures for considering the market power effect of transmission capacity in transmission augmentation assessment. These mathematical structures use the concepts of monopoly rent and quantity withheld in economics for market power modeling in the assessment process of transmission augmentation. The simultaneous-move and sequential-move games in applied mathematics are used to model the interactions of the transmission network service provider, generating companies, and the market management company in the proposed mathematical structures. The solution concept of Nash equilibria is reformulated as an optimization problem, and the multiple Nash equilibria is tackled through an introduced concept termed worst Nash equilibrium. A numerical solution is developed to solve the proposed mathematical structures. The numerical solution is an island parallel genetic algorithm nested in a standard genetic algorithm. The six-bus Garver's example system and the IEEE 14-bus test system are modified and studied. The results prove the strong mechanism of the developed structures for modeling the market power effect of transmission capacity in the assessment of transmission augmentation.

AB - This paper proposes two mathematical structures for considering the market power effect of transmission capacity in transmission augmentation assessment. These mathematical structures use the concepts of monopoly rent and quantity withheld in economics for market power modeling in the assessment process of transmission augmentation. The simultaneous-move and sequential-move games in applied mathematics are used to model the interactions of the transmission network service provider, generating companies, and the market management company in the proposed mathematical structures. The solution concept of Nash equilibria is reformulated as an optimization problem, and the multiple Nash equilibria is tackled through an introduced concept termed worst Nash equilibrium. A numerical solution is developed to solve the proposed mathematical structures. The numerical solution is an island parallel genetic algorithm nested in a standard genetic algorithm. The six-bus Garver's example system and the IEEE 14-bus test system are modified and studied. The results prove the strong mechanism of the developed structures for modeling the market power effect of transmission capacity in the assessment of transmission augmentation.

KW - Game theory

KW - Market power

KW - Nash equilibria

KW - Transmission system augmentation

UR - http://www.scopus.com/inward/record.url?scp=76649144781&partnerID=8YFLogxK

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U2 - 10.1109/TPWRS.2009.2036823

DO - 10.1109/TPWRS.2009.2036823

M3 - Article

AN - SCOPUS:76649144781

SN - 0885-8950

VL - 25

SP - 167

EP - 180

JO - IEEE Transactions on Power Systems

JF - IEEE Transactions on Power Systems

IS - 1

M1 - 5361325

ER -