Search

This paper investigates a duopoly game model in which two labor-managed firms compete in quantities. The game proceeds as follows. In the first stage, each labor-managed firm independently and simultaneously chooses the corporate social responsibility (CSR) level. In the second stage, each labor-managed firm independently and simultaneously chooses whether or not to offer the wage-rise contract policy (WRCP) as a strategic commitment device. If a labor-managed firm offers WRCP, it decides an output level and a wage premium rate. In addition, the labor-managed firm agrees to pay each employee a wage premium uniformly, provided that it actually produces more than the chosen output. At the end of the game, each labor-managed firm independently and simultaneously chooses an actual output. First, the paper examines the reaction functions of labor-managed firms in the model and shows that the reaction functions of labor-managed firms are upward-sloping. Next, this paper discusses the equilibrium of the model and shows that there is an equilibrium in which each labor-managed firm does not use CSR as a business strategy.

Digital transformation plays an important role in improving the efficiency of production of enterprises and can provide strong support for green and sustainable development. Compared with domestic enterprises, outward foreign direct investment (OFDI) enterprises have greater access to advanced digital technology. This paper aims to analyze the path selection of green and sustainable production for the digital transformation of manufacturing outward foreign direct investment (OFDI) companies, whether gradual or leapfrogging. However, there is a lack of systemic game mechanisms and numerical simulation methods for heterogeneous enterprises. Based on the analysis of reverse technology spillover intensity of outward foreign direct investment (OFDI) and differences in the absorptive capacity of enterprises, we have proposed the evolutionary game model for different path selection of digital transformation of manufacturing enterprises, due to heterogeneous enterprises under different spillover degrees with numerical analysis methods. The research results show that: (i) Under low reverse technology spillover intensity, all enterprises evolve to a gradual transformation path, and enterprises with weaker absorptive capacity converge faster; (ii) There is a certain threshold for reverse technology spillover. When reverse technology spillover intensity exceeds the threshold, enterprises with stronger absorptive capacity converge to a leapfrog transformation path, but enterprises with weak absorptive capacity converge to a gradual transformation path; (iii) With high reverse technology spillover intensity, all enterprises evolve toward a leapfrog transformation path, and faster convergence happens to enterprises with higher absorptive capacity. The evolutionary game path of digital transformation in manufacturing enterprises is illustrated in Fig. 1.

This paper examines an oligopoly game model with a concave demand function where labor-managed firms compete in quantities with each other. There is no possibility of entry or exit. The timing of the game is as follows. In the first stage, each labor-managed firm simultaneously and independently chooses the level of social concern. In the second stage, each labor-managed firm simultaneously and independently chooses whether to offer lifetime employment as a strategic commitment device. In the third stage, quantity competition takes place. This paper examines the reaction functions of labor-managed firms in the model. First, the paper presents the reaction functions of labor-managed firms in the game model. It is shown that the reaction functions of labor-managed firms have both upward and downward sloping cases. Next, the paper provides a simple example to support the above result. This example shows a case in which the reaction functions of labor-managed firms are downward-sloping.

This paper investigates a Cournot game model with a nonlinear demand function where a profit-maximizing firm competes against a socially concerned firm. The timing of the game is as follows. In stage one, each firm non-cooperatively decides whether to offer a wage-rise contract policy (WRCP) as a strategic commitment device. In stage two, after observing the rival’s decision in stage one, each firm non-cooperatively chooses its actual output. This paper presents the equilibrium solutions of the model.

We investigate why a firm might purposefully hire a chief executive officer (CEO) who under- or over-estimates the degree of substitutability between competing products. This counterintuitive result arises in imperfect competition because CEO bias can affect rival behavior and the intensity of competition. We lay out the conditions under which it is profitable for owners to hire biased managers. Our work shows that a universal policy that effectively eliminates such biases need not improve social welfare. [ABSTRACT FROM AUTHOR]

This paper investigates a Cournot game model with a nonlinear demand function where a profit-maximizing firm competes against a socially concerned firm. The timing of the game is as follows. In stage one, each firm non-cooperatively decides whether to offer a wage-rise contract policy (WRCP) as a strategic commitment device. In stage two, after observing the rival's decision in stage one, each firm non-cooperatively chooses its actual output. This paper presents the equilibrium solutions of the model. [ABSTRACT FROM AUTHOR]

Theory of the games offers perfect tools for modelling imperfect competition specific processes, manifested in relation with product quantity (Cournot/Stackelberg type), product price (Bertrand type) or quality. The equilibrium solution in terms of output is highlighted in a Cournot situation, whilst the price equilibrium solution can be revealed in a Bertrand scenario. Despite the different strategy type based on, the common denominator of these two models is given by the fact that strategic choices are made simultaneously. The Stackelberg model instead, represents a perfect information sequential game – firms advocating for quantity competition – having both theoretical and practical applicability. In the simplest possible case, with two players moving in two stages, the leader will always choose a certain output level, and the follower observes this decision and then establish his action path accordingly. Present paper’s main goal is to analyze a duopoly market with players adopting a Stackelberg behavior. Regardless the analyzed scenario, both firms are expected to survive and a stable equilibrium will manifest (the Subgame Perfect Equilibrium). The price will be invariable at market demand curve slope, whilst player’s choosed quantities and also gained profits level will be in an inverse dependence relation with it. The leader’s chosen output and also registered profit levels will be double vs the follower’s profit.

This paper considers a mixed duopoly model in which a state-owned firm competes with a labor-managed firm. The timing of this game is as follows. In the first stage, each firm decides whether or not to hire a manager. In the second stage, the firms that hired managers select incentive parameters for them. In the third stage, firms compete in Cournot fashion. The paper presents the subgame perfect equilibrium of this model.

Imperfect competition represents one of the main topic of modern economic analysis and it can be easily identified in the current economic climate. Whether we are reffering to the aggregate economic field or to a specific industry, certain topics can be highlighted due to their strong impact on the market analyse tools selection process: the differences between price and quantity competition scenario, competitors movement timing in a duopoly game, the role of product differentiation in determining market output/price levels or the presence of the market hierarchical structure. In order to better expolore the impact of previously mentioned concepts in a duopoly market, our present paper considers a consistent framework, making use of a product differentiation base model. We are discussing the market outcomes under quantity and price competition (Cournot & Bertrand simultaneous moves scenarios) but also sequential moves output competition (Stackelberg duopoly). We are also presenting a numerical simulation analyze that can be efficiently used to explore the model properties under the assumption of products differentiation degree variation. The models utilize both numerical and graphical presentation.

Research question: Utilizing the tenets of oligopoly competition that is a well-known type of imperfect rivalry, this study is interested in building a financial theory of inter-company price or pricing (ICP) economics and documenting its direct affinity with corporate financial reporting in general and corporate financial statements in particular. It is also interested in executing an analytical application unveiling the straight linkage of ICP with financial disclosure. Motivation: There is an extant body of literature that examines different ICP structures for different companies and industries or markets. However, the literature is silent in corroborating any explicit association that we argue and show does exist between ICP and accounting. To the best of our knowledge, this is the first study to break this silence. Idea: Cost advantage and operating profit are exploited to do the theorization and accounting implementation, by justifying the linkage between ICP and business financial statements. Findings: Investigations show that given that businesses transact or compete with each other at arm’s length terms under oligopoly competition with a Stackelberg game; ceteris paribus, the operating profit figure of the business with cost advantage will be higher than the operating profit figure of the business without cost advantage. Investigations also show that given that businesses transact or compete with each other at arm’s length terms under oligopoly competition with a Stackelberg game; ceteris paribus, asset size, earnings before interest and taxes (EBIT), earnings before taxes (EBT) and hence net income/profit after tax (NPAT) figures of the business with cost advantage will always be higher than asset size, EBIT, EBT and therefore NPAT figures of the business without cost advantage. Investigations further suggest that given that businesses transact or compete with each other at arm’s length terms under oligopoly competition with a Cournot game where there is neither any cost advantage nor disadvantage one way or the other; ceteris paribus, the operating profit, asset size, EBIT, EBT and NPAT figures of the interacting business among the others will be identical.

Brazil is a country with high solar energy potential due to the vast unhabitaded areas close to the Equator with high availability of solar radiation. With a simple setting, low maintenance costs, sustainability appeal and an inexhaustible power supply, the solar plants have been transformed in attractive investments in the electrical power sector. In the Brazilian Northeastern region, it's possible to find the best conditions for the development of new solar plants due to the climate, dry and sunny all year. The present work aims to present the use of game theory as an innovative method in the investment decision process between two companies of solar energy generation in Northeastrn region of Brazil. The methodology used for this analysis was the Cournot method to conclude whether competition or cooperation among the agents involved prevails in the market.

We investigate why a firm might purposefully hire a chief executive officer (CEO) who under- or over-estimates the degree of substitutability between competing products. This counterintuitive result arises in imperfect competition because CEO bias can affect rival behavior and the intensity of competition. We lay out the conditions under which it is profitable for owners to hire biased managers. Our work shows that a universal policy that effectively eliminates such biases need not improve social welfare.

This paper examines the equilibrium outcomes of firms’ decision games to hire managers when there is a capitalist firm competing against a labor-managed firm. The paper shows that if only the capitalist firm hires a manager, then the equilibrium coincides with the solution when neither firm hires a manager. In addition, the paper shows that if only the labor-managed firm hires a manager, then at equilibrium the capitalist firm’s output and the market price are lower than when neither firm hires a manager.

Imperfect competition represents one of the main topic of modern economic analysis and it can be easily identified in the current economic climate. Whether we are reffering to the aggregate economic field or to a specific industry, certain topics can be highlighted due to their strong impact on the market analyse tools selection process: the differences between price and quantity competition scenario, competitors movement timing in a duopoly game, the role of product differentiation in determining market output/price levels or the presence of the market hierarchical structure. In order to better expolore the impact of previously mentioned concepts in a duopoly market, our present paper considers a consistent framework, making use of a product differentiation base model. We are discussing the market outcomes under quantity and price competition (Cournot & Bertrand simultaneous moves scenarios) but also sequential moves output competition (Stackelberg duopoly). We are also presenting a numerical simulation analyze that can be efficiently used to explore the model properties under the assumption of products differentiation degree variation. The models utilize both numerical and graphical presentation. [ABSTRACT FROM AUTHOR]

The New Bilateral Air Services Agreement between Mexico and the United States specifies that all cargo and passenger aircraft of both countries will allow any airline to flight from one point in the neighboring country and make a stop at another airport to pick up and unload passengers or cargo in the airports of both countries. This paper analyzes the 2016 “open skies agreement” between United States of America and Mexico and its expected effects on the Mexican airlines industry. After reviewing the evidence and analyzing the performance of Mexican and US airlines, it is inferred that the bilateral agreement will increase foreign investment in Mexico due to the entry into the market of a greater number of North American passenger and cargo airlines, but above all, will increase international trade in goods and services, being the United States airline industry the one that will benefit the most due to the superiority of the air fleet over the Mexican. The theoretical Cournot model adapted from Alves and Forte (2015) indicates that airlines that do not have the ability to compete for new routes will be adversely affected, their profits will decrease, an assertion that contradicts the expected effects in the literature.

In this paper, we will analyse the relationship between privatization of a public firm and tax revenue for the domestic government in an international competition, with import tariffs. We consider a duopoly model where a domestic public firmand a foreign private firmcompete in the domesticmarket, asCournot players. Furthermore, the domestic government imposes a tariff to regulate an imported good, and may have a higher preference for tariff revenue than for social welfare. We compute the outputs at equilibrium and we show that privatization (i) will increase the profits of both domestic and foreign firms; (ii) will increase the tariff imposed to the imported good; and (iii) will decrease the domestic welfare. Furthermore, we demonstrate that a rise in the government’s preference for tariff revenues raises the social welfare in both mixed and private models.

This paper investigates Cournot and Bertrand duopoly models with complementary goods, where firms can enter into lifetime employment contracts with their respective workers as a strategic device. The paper treats the following four cases: ‘Cournot competition with strategic complements’, ‘Cournot competition with strategic substitutes’, ‘Bertrand competition with strategic substitutes’ and ‘Bertrand competition with strategic complements’. The paper presents the equilibrium outcomes of the four cases. In addition, it is shown that lifetime employment is beneficial for firms in the cases with strategic complements.

Digital transformation plays an important role in improving the efficiency of production of enterprises and can provide strong support for green and sustainable development. Compared with domestic enterprises, outward foreign direct investment (OFDI) enterprises have greater access to advanced digital technology. This paper aims to analyze the path selection of green and sustainable production for the digital transformation of manufacturing outward foreign direct investment (OFDI) companies, whether gradual or leapfrogging. However, there is a lack of systemic game mechanisms and numerical simulation methods for heterogeneous enterprises. Based on the analysis of reverse technology spillover intensity of outward foreign direct investment (OFDI) and differences in the absorptive capacity of enterprises, we have proposed the evolutionary game model for different path selection of digital transformation of manufacturing enterprises, due to heterogeneous enterprises under different spillover degrees with numerical analysis methods. The research results show that: (i) Under low reverse technology spillover intensity, all enterprises evolve to a gradual transformation path, and enterprises with weaker absorptive capacity converge faster; (ii) There is a certain threshold for reverse technology spillover. When reverse technology spillover intensity exceeds the threshold, enterprises with stronger absorptive capacity converge to a leapfrog transformation path, but enterprises with weak absorptive capacity converge to a gradual transformation path; (iii) With high reverse technology spillover intensity, all enterprises evolve toward a leapfrog transformation path, and faster convergence happens to enterprises with higher absorptive capacity. The evolutionary game path of digital transformation in manufacturing enterprises is illustrated in Fig. 1., Competing Interests: The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper., (© 2024 The Authors.)

This study seeks to examine a game theory view of China and USA FDI outflows using the Static Cournot Model of Complete Information to show how the two countries can come into equilibrium. It is specifically aimed at establish, examining and analyzing the best and fair equilibrium on FDI outflows between the two countries. The study uses annual time series data for a range of 1982 to 2016 on both FDI outflows in China and USA. The study finds Game theory to be the efficient framework on finding the equilibrium of the conflict through Cournot Duopoly Model. The study employed cointegration analysis and OLS method to achieve the objective. The results showed that when game theory is applied in a static situation with complete information, Nash equilibrium is established both when the countries decide to cooperate or not to cooperate. But the gains are much higher when the countries decide to cooperate. The main conclusion is that, there is a conflict solving solution to the battle on FDI outflows between these countries if they decide not to cooperate. However, if both countries decide to cooperate then they will monopolize the FDI outflows market by higher levels and maximize the total gains. [ABSTRACT FROM AUTHOR]

In this paper, two different mechanisms are used to study a homogeneous Cournot duopoly in a market characterized by the downward sloping and concave price function. Two firms, which have constant marginal costs, use adaptive, low-rationality mechanisms to adjust their production levels toward equilibrium. In particular, the stability of the equilibrium for two different mechanisms is studied. However, complex dynamics arise, especially when the reaction coefficient increases. Finally, we compare the obtained results of the two models.

This article focuses on the strategic behavior of firms in the output and the emissions markets in the presence of market power. We consider the existence of a dominant firm in the permit market and different structures in the output market, including Cournot and two versions of the Stackelberg model, depending on whether the permit dominant firm is a leader or a follower in the output market. In all three models, the firm that dominates the permit market is more sensitive to its initial allocation than its competitor in terms of abatement and less sensitive in terms of output. In all three models, output is decreasing and the permit price is increasing in the permit dominant firm’s initial allocation. In the Cournot model, permit dominance is fruitless in terms of output and profit if the initial allocation is symmetric. Output leadership is more relevant than permit dominance since an output leader always tends to, ceteris paribus, produce more and make more profit whether it also dominates the permit market or not. This leadership can only be overcompensated for by distributing a larger share of permits to the output follower, and only if the total number of permits is large enough. In terms of welfare, Stackelberg is always superior to Cournot. If the initial permit allocation is symmetric, welfare is higher when the same firm dominates the output and the permit market at the same time.

The paper considers the model of strategic interaction of firms at the quantity oligopoly market. There are several price-makers maximizing profits using the Cournot strategy, and also several price-takers obtaining outputs from the equivalence of price and marginal costs. The second strategy can be used due to some rational reasons, for example, unavailability of demand function, and competitors’ cost functions essential for reaction curves construction, or due to misunderstanding of its own market power and influence on the equilibrium parameters. Myopic behavior decreases profits comparing to Cournot firms if occurs unilaterally. But the competitors will adapt, and it can unexpectedly make the second strategy effective. The paper analyses the case of linear demand and symmetric firms with quadratic costs. It’s shown that prace-takers’ output is even greater than the output of the Stackelberg leader. The profit can be greater or lower than the original price-makers profits. It depends on the market parameters include the price elasticity of demand and the rate of marginal costs increasing. It’s shown that the probability for price-taker strategy to be efficient is not big, but increases at a large market with inelastic demand and many firms with slowly increasing marginal costs. It’s better for price-taker to be the only one firm with such a strategy.

It is known that Nash equilibria of potential game belong to the set of stationary points of the potential, moreover only the potential’s global maximum is an equilibrium in general case. In the paper, we consider Cournot oligopoly model with linear inverse demand function and S-shape players’ costs functions determined by cubical polynomials. S-shape form of a function means changing of function’s concavity by its convexity. Costs function of such form reflects changing of increasing return of the scale by decreasing return of the scale, what may be explained as a stage of introduction of a new capacities that is changed by a stage of its normal operation. Such a model is a potential game due to linearity of inverse demand function. The potential is constructed and it has a form of cubical polynomial. Nonconcavity of potential leads to non-uniqueness of equilibrium in general case. Author investigated in other papers the local search of stationary points with multi-start approach and with the following check of the point whether it is an equilibrium. That paper is concerned with an adaptation of branch and bound method for search of the potential’s global maximum which is always an equilibrium point. In the paper, the method is described and numerical experiment results are given.

We investigate the price effect of an excise tax in a duopoly setting. Previous studies have considered the Cournot and Bertrand models but ignore the Cournot-Bertrand model in which one firm competes in output and the other firm competes in price. This omission is important because Cournot-Bertrand behavior is observed in the real world, and the Cournot-Bertrand model provides dramatically different results. Unlike in the Cournot and Bertrand models, we find that firms in the same industry have different pass-through rates in the Cournot-Bertrand model even when they face identical demand and cost conditions. This provides another reason why tax incidence policy is so complex. [ABSTRACT FROM AUTHOR]

En los mercados eléctricos competitivos existen dos tipos de compañías de generación, las cuales pueden clasificarse de acuerdo a su poder de mercado en compañías tomadoras de precios y compañías líderes de mercado. La oferta óptima de venta de una compañía tomadora depende del comportamiento esperado de los precios de mercado, mientras que la oferta de las compañías líderes es una función de sus correspondientes curvas de demanda residual, ésta captura la forma en la cual varían los precios con respecto a cambios en los niveles de producción de una compañía en particular. El propósito de este artículo es medir el potencial poder de mercado, de una compañía líder, cuando decide competir en cantidades según el modelo estático de Cournot. La compañía líder ha sido modelada como un problema de optimización no lineal con restricciones lineales. Finalmente, se presenta y analiza un caso de estudio.In a competitive electricity market two kinds of generating companies coexist; according to their market power it possible to classify them in price-taking generating companies and leader generating companies. The optimal bidding of price-taking companies depends on the market clearing prices. On the other hand, the optimal bidding of leader companies depends on their corresponding residual demand curves, which capture how the market clearing price changes with the variation on the levels production of a particular generating company. The idea of this article is to assess the potential market power of a leader company when it decides to compete in quantities according to the Cournot model. A non-linear optimization problem has been used to model the lemel the dleader generating company. Finally, a realistic case study is presented and discussed.

We analyze the behavior of spot prices in the Colombian wholesale power market, using a series of models derived from industrial organization theory. We first create a Cournot-based model that simulates the strategic behavior of the market-leader power generators, which we use to estimate two industrial organization variables, the Index of Residual Demand and the Herfindahl-Hirschman Index (HHI). We use these variables to create VAR models that estimate spot prices and power market impulse-response relationships. The results from these models show that hydroelectric generators can use their water storage capability strategically to affect off-peak prices primarily, while the thermal generators can manage their capacity strategically to affect on-peak prices. In addition, shocks to the Index of Residual Capacity and to the HHI cause spot price fluctuations, which can be interpreted as the generators´ strategic response to these shocks.

In this paper, we will analyse the relationship between privatization of a public firm and tax revenue for the domestic government in an international competition, with import tariffs. We consider a duopoly model where a domestic public firmand a foreign private firmcompete in the domesticmarket, asCournot players. Furthermore, the domestic government imposes a tariff to regulate an imported good, and may have a higher preference for tariff revenue than for social welfare. We compute the outputs at equilibrium and we show that privatization (i) will increase the profits of both domestic and foreign firms; (ii) will increase the tariff imposed to the imported good; and (iii) will decrease the domestic welfare. Furthermore, we demonstrate that a rise in the government's preference for tariff revenues raises the social welfare in both mixed and private models. [ABSTRACT FROM AUTHOR]

In this paper, two different mechanisms are used to study a homogeneous Cournot duopoly in a market characterized by the downward sloping and concave price function. Two firms, which have constant marginal costs, use adaptive, low-rationality mechanisms to adjust their production levels toward equilibrium. In particular, the stability of the equilibrium for two different mechanisms is studied. However, complex dynamics arise, especially when the reaction coefficient increases. Finally, we compare the obtained results of the two models. [ABSTRACT FROM AUTHOR]

Copyright of Ecos de Economía is the property of Universidad EAFIT and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this paper, a two-dimensional Cournot model is proposed to study generation companies’ (GENCO’s) strategic quantity-setting behaviors in the newly established Yunnan’s electricity market. A hybrid pricing mechanism is introduced to Yunnan’s electricity market with the aim to stimulate electricity demand. Market equilibrium is obtained by iteratively solving each GENCO’s profit maximization problem and finding their optimal bidding outputs. As the market mechanism is a key element of the electricity market, impacts of different market mechanism parameters on electricity price and power generation in market equilibrium state should be fully assessed. Therefore, based on the proposed model, we precisely explore the impacts on market equilibrium of varying parameters such as the number of GENCOs, the quantity of ex-ante obligatory-use electricity contracts (EOECs) and the elasticity of demand. Numerical analysis results of Yunnan’s electricity market show that these parameters have notable but different effects on electricity price. A larger number of GENCOs or less EOEC contracted with GENCOs will have positive effects on reducing the price. With the increase of demand elasticity, the price falls first and then rises. Comparison of different mechanisms and relationship between different parameters are also analyzed. These results should be of practical interest to market participants or market designers in Yunnan’s or other similar markets.

In a competitive electricity market two kinds of generating companies coexist; according to their market power it possible to classify them in price-taking generating companies and leader generating companies. The optimal bidding of price-taking companies depends on the market clearing prices. On the other hand, the optimal bidding of leader companies depends on their corresponding residual demand curves, which capture how the market clearing price changes with the variation on the levels production of a particular generating company. The idea of this article is to assess the potential market power of a leader company when it decides to compete in quantities according to the Cournot model. A non-linear optimization problem has been used to model the lemel the dleader generating company. Finally, a realistic case study is presented and discussed.

The penetration of renewables on the demand side has recently attracted a large amount of attention. Its dual identity has an important impact on the competition between power producers and market dispatching. This study analyzed the participation of prosumers in the Nash–Cournot model for power market clearing. On this basis, we considered the uncertainty of renewable energy production, under which we used the distributionally robust optimization (DRO) model to produce a market equilibrium. Moreover, the Column-and-Constraint Generation algorithm was employed to solve the model. As a result, the impact of prosumers penetration and their production uncertainty on market equilibria was quantified and analyzed. Numerical simulations on an IEEE-30 bus system investigated the impact of the uncertainty of renewable energy output, the penetration level of wind power, and the demand level on the market equilibria. Test results demonstrate that the social welfare obtained from the proposed DRO model is 6.89% higher than that obtained from traditional robust optimization models. [ABSTRACT FROM AUTHOR]

ABSTRACT Cournot establishes a Nash equilibrium to a duopoly game under output competition; Bertrand finds a different Nash equilibrium under price competition. Both treat the strategic choice variable (output versus price) and the timing of play as exogenous. We investigate Cournot-Bertrand models where one firm competes in output and the other competes in price in both static and dynamic settings. We also develop a general model where both the timing of play and the strategic choice variables are endogenous. Consistent with the conduct of Honda and Scion, we show that Cournot-Bertrand behaviour can be a Nash equilibrium outcome. [ABSTRACT FROM AUTHOR]

This paper investigates the degree of competitive forces across Greek industries over the period 2000-2011 at the three-digit SIC level. Based on the simple Cournot modelling approach, three alternative models are used to investigate the competitive conditions across industries. The empirical results indicate that the majority of Greek industries, with the exception of the Chemicals industry, operate in non-competitive conditions. [ABSTRACT FROM AUTHOR]

Abstract: In the proposed model, the independent system operator (ISO) provides the opportunity for maintenance outage rescheduling of generating units before each short-term (ST) time interval. Long-term (LT) scheduling for 1 or 2years in advance is essential for the ISO and the generation companies (GENCOs) to decide their LT strategies; however, it is not possible to be exactly followed and requires slight adjustments. The Cournot-Nash equilibrium is used to characterize the decision-making procedure of an individual GENCO for ST intervals considering the effective coordination with LT plans. Random inputs, such as parameters of the demand function of loads, hourly demand during the following ST time interval and the expected generation pattern of the rivals, are included as scenarios in the stochastic mixed integer program defined to model the payoff-maximizing objective of a GENCO. Scenario reduction algorithms are used to deal with the computational burden. Two reliability test systems were chosen to illustrate the effectiveness of the proposed model for the ST decision-making process for future planned outages from the point of view of a GENCO. [Copyright &y& Elsevier]

The analysis of the Nash equilibrium (NE) in electricity markets with imperfect competition is subject to two major challenges: the treatment of multiplayer games and the determination of the existence of multiple market equilibria. To resolve these obstacles, a solution method, based on the payoff matrix approach and polynomial equations, is proposed in this paper to calculate all the Nash equilibria of multiplayer games in the electricity markets. First, the proposed method decomposes the game by means of a set of all pure strategies assigned with positive probabilities (support). For each possible support, the NE condition can be characterized by a set of polynomial equations with inequality constraints. Next, the homotopy continuation algorithm is employed to obtain all solutions of the polynomial system. Finally, all Nash equilibria can be found by verifying each solution of all polynomial systems. Two example systems, one involving the Cournot model and the other based on the supply function equilibrium (SFE) model, are applied to test the proposed method, respectively. The results show that the proposed method has the ability to identify all NE under certain conditions, indicating that the proposed algorithm is useful for providing insights into the theoretical analysis of electricity markets. [ABSTRACT FROM PUBLISHER]

This paper presents results from a large-scale Cournot model of the U.S. Eastern Interconnection using a DC load flow network. There are 100 network locations (at the level of control areas) along with 2725 generators owned by 99 Cournot firms and 200 competitive fringe suppliers. These results demonstrate that this modeling approach can analyze potential generation market power with a reasonable approximation of the actual transmission network over a large integrated region. While such models have been used to analyze market design alternatives, their application to regulatory decision-making concerning generation market power mitigation has been more controversial. We suggest that such large-scale market price simulations could improve upon aspects of the existing generation market power screening methods used in the United States for mergers and market-based rates, illustrating such applications using this model. [ABSTRACT FROM AUTHOR]

Abstract: The main purpose of this paper is to develop a new optimum output quantity decision analysis of a duopoly market under a fuzzy decision environment. To efficiently handle the fuzziness of the decision variables, the linguistic values, subjectively represented by the trapezoidal fuzzy numbers, are used to act as the evaluation tool of decision variables such as fixed cost and unit variable cost. This paper will apply fuzzy set theory to construct an optimum output quantity decision model based on aiming for the maximum profit of a duopoly market. By using this decision model, the decision-makers’ fuzzy assessments with various variables can be considered in the decision process to assure more convincing and accurate decision-making. [Copyright &y& Elsevier]

A fundamental bid-based stochastic model is presented to predict electricity hourly prices and average price in a given period. The model captures both the economic and physical aspects of the pricing process, considering two sources of uncertainty: availability of the units and demand. This work is based on three oligopoly models—Bertrand, Cournot, and supply function equilibrium (SFE) due to Rudkevich, Duckworth, and Rosen—and obtains closed form expressions for expected value and variance of electricity hourly prices and average price. Sensitivity analysis is performed on the number of firms, anticipated peak demand, and price elasticity of demand. The results show that as the number of firms in the market decreases, the expected values of prices increase by a significant amount. Variances for the Cournot model also increase, but the variances for the SFE model decrease, taking even smaller values than Bertrand's. Thus, if the Rudkevich model is an accurate representation of the electricity market, the results show that an introduction of competition may decrease the expected value of prices but the variances may actually increase. Finally, using a refinement of the model, it has been demonstrated that an accurate temperature forecast can reduce significantly the prediction error of the electricity prices. [ABSTRACT FROM AUTHOR]

The residual demand derivative plays a central role in constructing the best response to competitors' strategies in widely used strategic models such as the Cournot model and the supply function model. In the absence of transportation or transmission constraints, the residual demand derivative is obtained straightforwardly by taking the derivative of the residual demand function with respect to price. However, in an electricity market, the market is embedded in a transmission network. When there is no transmission congestion, the residual demand derivative can be calculated as usual, but when there is transmission congestion, the residual demand derivative is more difficult to calculate. In this paper, we characterize the transmission-constrained residual demand derivative. We use the dc power flow model and characterize the residual demand derivative analytically. The residual demand derivative could also be obtained from the solution of a specific weighted least squares problem. Several properties of the residual demand derivative are implications of the weighted least squares theory. We also characterize the condition under which the residual demand derivative will be bounded or unbounded when there are perfectly elastic supplies/demands at some buses in the system. We verified our results in three examples: a two-bus system, a four-bus two-loop system, and a three-bus one-loop system with one perfectly elastic supply. The residual demand derivative characterization can be used to analyze the strategic behavior in both the Cournot model and the supply function model with transmission constraints, and it can be easily incorporated into sophisticated optimal strategy algorithms. [ABSTRACT FROM AUTHOR]