A game-theoretic demand response market with networked competition model

In classical competition models, each firm decides on the amount of production to maximize its own profit and only one market is shared among all firms. In the case with more than one market which has been proposed in recent years, Networked Cournot Competition (NCC) models the relation between firms and markets. This paper describes a model of competition between demand response aggregators (as firms) which sell aggregated energy stored in residential storage devices (as a homogeneous good) in a networked environment with a market maker. This game is called Networked Stackelberg Competition (NSC). In this paper, for each firm, the optimal bidding plan and Nash equilibrium are obtained in an incomplete information game. Demand response aggregators submit their bids and the market maker (system operator) controls the transaction powers and price subject to grid's constraints and policies. Also, the effect of price-based demand scheduling has been studied on the firms' payoffs in a real world case study.