Competitive Analysis at the Cournot-Nash Equilibrium of an Interconnected Network

Abstract

The electric power network has long been subject to monopolization, encompassing production, transportation, and distribution sectors. However, recent liberalization efforts have introduced competition into the electricity market. To understand and manage this competition, game theory, a prominent tool in economics, is frequently employed. Specifically, competition within the electricity market has been analyzed through various game-theoretical models, including Bertrand's atomicity, Cournot's homogeneity, and Nash's research competition. These models aim to achieve the Cournot-Nash equilibrium, where each participant in the market makes optimal decisions given the strategies of others. To effectively allocate production and ensure a balance between supply and demand, as well as to maintain the stability of the interconnected network, one has adopted a method that combines Load Flow techniques with game theory principles. This hybrid approach enables a strategic distribution of power production, taking into account the competitive dynamics of the market. By integrating these methodologies, one can address the complexities of competition while ensuring efficient and stable operation of the power grid. This innovative approach not only enhances the management of electricity production and distribution but also fosters a more competitive and resilient power network. Moreover, the application of game theory in this context allows for a deeper understanding of strategic interactions among market participants. It helps in predicting behaviors, formulating strategies, and anticipating market changes, thus providing a robust framework for decision-making. This is particularly crucial in a liberalized market where multiple entities vie for market share and profitability. By employing game-theoretical insights, one can simulate various market scenarios, optimize resource allocation, and enhance overall market efficiency. Furthermore, this approach supports the integration of renewable energy sources by ensuring that their variable nature is accommodated within the grid's operational dynamics. In summary, the intersection of game theory and load flow methods offers a comprehensive solution to the challenges posed by a competitive electricity market, paving the way for a sustainable and efficient energy future.