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SUMMARY:Core-Selecting Mechanisms in Electricity Markets - Orcun Karaca (E
 TH Zürich)
DTSTART:20190110T170000Z
DTEND:20190110T180000Z
UID:TALK116809@talks.cam.ac.uk
CONTACT:INI IT
DESCRIPTION:Previous work on electricity market auctions considers the pay
 -as-bid and the locational marginal pricing (LMP) mechanisms. In both mech
 anisms\, generators can bid strategically to influence their profits since
  these mechanisms do not incentivize truthful bidding. As an alternative\,
  under the Vickrey-Clarke-Groves mechanism\, truthful bidding is the domin
 ant-strategy Nash equilibrium. Despite having this theoretical virtue\, co
 alitions of participants can influence the auction outcome to obtain highe
 r collective profit. In this talk\, we characterize the exact class of coa
 lition-proof mechanisms as the core-selecting mechanisms. In addition to b
 eing coalition-proof\, we show that these mechanisms generalize the econom
 ic rationale of the LMP mechanism. Namely\, these mechanisms are the exact
  class of mechanisms that ensure the existence of a competitive equilibriu
 m in linear/nonlinear prices. This implies that the LMP mechanism is also 
 core-selecting\, and hence coalition-proof.  In contrast to the LMP mechan
 ism\, core-selecting mechanisms exist for a broad class of electricity mar
 kets\, such as ones involving nonconvex costs and nonconvex constraint set
 s. In addition\, they can approximate truthfulness without the price-takin
 g assumption of the LMP mechanism. Finally\, we show that they are also bu
 dget-balanced. Our results are verified with case studies based on optimal
  power flow test systems and the Swiss reserve market.
LOCATION:Seminar Room 1\, Newton Institute
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