The Investigation of System Constraints on Power Producers' Strategies Using a Game Theoretical Approach

We investigate the impact of constraints (generation and transmission) and demand elasticity on Independent Power Producers' (IPPs) market strategies. An analytical model based on classical Cournot model has been developed to investigate the strategies of power producers. The results show that some IPPs are capable of obtaining same profit with different outputs through capacity withholding, which results in the increase of market price. Consumer can reduce its payment by changing its elasticity of demand within certain margins.