Oligopoly market models applied to electric utilities: How will generating companies behave in a deregulated industry

An oligopoly market is analyzed which compares the oligopoly uniform market price to a fully competitive market price. The oligopoly consists of three electric utilities that behave as Cournot and Stackelberg leader—followers. A market simulation of the ERCOT market is also presented which includes the impact on market price when there are new market entrants into the oligopoly. The two case studies analyze the market with and without transmission constraints and identify how various transmission limitations can support strategic behavior by the utilities and ultimately impact the market price.