The Bidding Game Model Of Power Generation Company During The Marketization Proceeding And Demonstration

In electricity market, Power Generation Companies can maximize profits through strategic bidding, while it is also necessary for regulators to investigate such strategic bidding behavior so as to identify possible market power abuse and to limit such abuse by introducing appropriate market regulation rules. This paper is established in the regulation of electricity market. The paper studies on the bidding game of Power Generation Company during the marketization proceeding, and explores the inherence motivation of using cooperative bidding or non-cooperative bidding strategy by Generation Company.The bidding of Power Generation Company relate on the mode of electricity market and the trade mechanism. So, firstly the paper introduces the mode for Industrial Organization of Chinese Power Industry during the marketization proceeding.The paper analyses the non-cooperative bidding model of Power Generation Company during the marketization proceeding, by using the first-price-sealed bid auction. From the simple case without regard to the Vesting Contract, we construct the bidding model of Power Generation Company with incomplete information. Then introduce the Vesting Contract into the model, and constructs the dynamic bidding model of Power Generation Company. Through solving the model, it concludes that the optimal bidding will change with the quantity of Vesting Contract during the deepening of Chinese Electricity Market, and the change is affected by the price of Vesting Contract. Then the author puts forward some regulation policy based on these conclusions.The paper analyses the cooperative bidding model of Power Generation Company during the marketization proceeding, by using the basic principle of game theory. Based on the costs differences among Power Generation Company. The paper separates the cooperative bidding into two cases, and analyses the cooperative bidding by two ways, such as static game and dynamic game. The author believes that the cooperative bidding model of Power Generation Company is likely to be a prisoners' dilemma game, or be a chicken game, or be a boxed pigs game. The type of game lies on the cap of MCP and the costs difference among the Generation Companies. Although the cooperative bidding is not steady in static game, it will be realize in some cases in dynamic game, and the MCP will reach the cap. Power Generation Companies will collude and bid ahigh price, consequently gain excess income. The author also puts forward some regulation policy based on these conclusions.At last, a simple example of DN Generation Company in Z province is served for illustrating some presented method. The conclusions of the paper will help regulator identify some cooperative or non-cooperative behavior that depress the efficiency of electricity market, and will provide some basic theory for the establishment of regulation in Electricity Market. At the same time, this paper is also useful for Power Generation Companies to make the best bidding strategy, which are looking for maximize their profits.