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Journal of Applied Mathematics
Volume 2014, Article ID 237094, 10 pages
http://dx.doi.org/10.1155/2014/237094
Research Article

Research on Power Producer’s Bidding Behavior Based on the Best-Response Dynamic Model

School of Economics and Management, North China Electric Power University, Beijing 102206, China

Received 27 January 2014; Accepted 4 June 2014; Published 22 June 2014

Academic Editor: Jinde Cao

Copyright © 2014 Jingqi Sun et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

As China’s electricity market is facing many problems, the research on power producer’s bidding behavior can promote the healthy and sustainable development of China’s electricity market. As a special commodity, the “electricity” possesses complicated production process. The instable market constraint condition, nonsymmetric information, and a lot of random factors make the producer’s bidding process more complex. Best-response dynamic is one of the classic dynamic mechanisms of the evolutionary game theory, which applies well in the repeated game and strategy evolution that happen among a few bounded rational players with a quick learning capability. The best-response dynamic mechanism is employed to study the power producer’s bidding behavior in this paper, the producer’s best-response dynamic model is constructed, and how the producers would engage in bidding is analyzed in detail. Taking two generating units in South China regional electricity market as the example, the producer’s bidding behavior by following the producer’s best-response dynamic model is verified. The relationships between the evolutionarily stable strategy (ESS) of power producer’s bidding and the market demand, and ceiling and floor price as well as biding frequency are discussed in detail.