December 2004
31
R. Rajaraman. “Optimal Bidding Strategies in Electricity Markets”
Example 5: Optimal Bidding
Strategy
•
In the absence of market power, all
generators will bid their incremental costs,
excepting generator C1
•
•
Generator C1 will bid just below $55/MWh
•
•
To see why, assume first that everyone
bids their incremental costs