A comparison of residual demand models for oligopolistic markets

Abstract

In many pool-based electricity markets two types of generating companies coexist, namely price-taking and leader companies. In this context, the optimal bidding of a leader company, and consequently the market clearing price, is mainly determined by its residual demand curve, which can be modeled in different ways. In this work, three different residual demand curves have been adopted to simulate the optimal strategy of an oligopolistic company. The influence of these models on the gap between the expected and actual market prices, as well as on the resulting leader company profit is analyzed.