A research framework for generalized congestions and market power

Abstract

Besides the transmission congestion reflecting the physical stability of a power system, power market is also constrained by factors like primary energy, emissions, technical support and multi-game. These factors affecting both competition level and efficiency of a power market can be called by a generic term as generalized congestions. The purpose of regulation is to avoid the abuse of market power and reduce the risk in social welfare. However, inappropriate regulation may also degrade the efficiency of a market; even endanger the market and social stability. So regulation is also a kind of generalized congestions. The capability of market participants to influence (increase or decrease) market efficiency through taking the advantage of generalized congestions can be called as market power, while generalized market power reflects the capability to influence social welfare. Generalized congestions, market power and generalized market power are analyzed in aspects such as classification, evaluation indexes, control measures and research methods. A framework is proposed for the mechanism study of generalized congestions, market power and generalized market power. With this framework, experimental economics can be implemented, and comprehensive analysis can be taken to study the mechanism for generalized congestions to influence the market power.