Optimal Willingness to Supply Wholesale Electricity Under Asymmetric Linearized Marginal Costs

Authors

  • David Hudgins

Abstract

This analysis derives the profit-maximizing willingness to supply functions for single-plant and multi-plant wholesale electricity suppliers that all incur linear marginal costs. The optimal strategy must result in linear residual demand functions in the absence of capacity constraints. This necessarily leads to a linear pricing rule structure that can be used by firm managers to construct their offer curves and to serve as a benchmark to evaluate firm profit-maximizing behavior. The procedure derives the cost functions and the residual demand curves for merged or multi-plant generators, and uses these to construct the individual generator plant offer curves for a multi-plant firm.Keywords: Wholesale Electricity; Cost; Willingness to Supply; Linear Analysis; Multi-Plant; AsymmetricJEL Classifications: D43; L11; L94

Downloads

Download data is not yet available.

Author Biography

David Hudgins

Department of EconomicsAssistant Professor

Downloads

Published

2012-08-16

How to Cite

Hudgins, D. (2012). Optimal Willingness to Supply Wholesale Electricity Under Asymmetric Linearized Marginal Costs. International Journal of Energy Economics and Policy, 2(4), 307–317. Retrieved from https://econjournals.org.tr/index.php/ijeep/article/view/261

Issue

Vol. 2 No. 4 (2012)

Section

Articles

License

Submission of an article implies that the work described has not been published previously , that it is not under consideration for publication elsewhere, that its publication is approved by all authors and tacitly or explicitly by the responsible authorities where the work was carried out, and that, if accepted, will not be published elsewhere in the same form, without the written consent of the Publisher. The Editors reserve the right to edit or otherwise alter all contributions, but authors will receive proofs for approval before publication.