Market Power Exercised by Oligopolistic Generating Companies in Imperfect Electricity Markets

In a competitive electricity market coexists two kind of generating companies, according to their market power it is possible to classify them in price-taking generating companies and leader generating companies. The aim of this paper is to assess how the hourly energy price rises when a leader company decides to compete in quantities. The leader generating company model is based on the well-known Cournot model and the residual demand curve concept; the model has been formulated as a non-linear optimization problem with linear constrains. The results obtained from a case study allow us to conclude that the leader company exercises its potential market power when it removes energy of its own hourly bids to rise the hourly energy prices