We study deregulated power markets with strategic power suppliers. In deregulated markets, each supplier submits its supply function (i.e., the amount of electricity it is willing to produce at various prices) to the independent system operator (ISO), who based on the submitted supply functions, dispatches the suppliers to clear the market with minimal total generation cost. If all suppliers reported their true marginal cost functions as supply functions, the market outcome would be efficient (i.e., the total generation cost is minimized). However, when suppliers are strategic and aim to maximize their own profits, the reported supply functions are not necessarily the true marginal cost functions, and the resulting market outcome may be inefficient. The efficiency loss depends crucially on the topology of the underlying transmission network. This paper provides an analytical upper bound of the efficiency loss due to strategic suppliers, and proves that the bound is tight under a large class of transmission networks (i.e., weakly cyclic networks). Our upper bound sheds light on how the efficiency loss depends on the transmission network topology (e.g., the degrees of nodes, the admittances and flow limits of transmission lines).

翻译：我们研究具有策略性电力供应商的放松管制电力市场。在放松管制市场中，每个供应商向独立系统运营商（ISO）提交其供给函数（即在不同价格下愿意生产的电量），ISO根据提交的供给函数调度供应商，以最小化总发电成本实现市场出清。若所有供应商都将其真实边际成本函数作为供给函数上报，则市场结果将是高效的（即总发电成本最小化）。然而，当供应商具有策略性且以自身利润最大化为目标时，上报的供给函数未必是真实边际成本函数，由此导致的市场结果可能非高效。效率损失关键取决于底层输电网络的拓扑结构。本文给出了由策略性供应商导致的效率损失的解析上界，并证明该上界在一大类输电网络（即弱环网）中是紧致的。我们的上界揭示了效率损失如何依赖于输电网络拓扑（例如节点度数、输电线路导纳及潮流极限）。