Multiplicity of equilibria in conjectural variations models of natural gas markets
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Abstract: Spatial partial equilibrium models incorporating conjectural variations are widely used to analyze the development of oligopolistic multi-agent markets, such as international energy and raw material markets. Although this model type can produce multiple equilibria under commonly used assumptions, to the best of our knowledge, the consequences for the interpretation of the model results have not yet been explored in detail. To this end, we derive a linear complementarity model for the gas market and discuss under which assumptions on the model structure a component of the solution is unique. In particular, we find that the gas flow between a trader and a consumer is unique whenever the trader is modeled to exert market power in the consumer's market. We demonstrate our findings by computing the extreme points of the polyhedral solution space and show that erroneous conclusions could be drawn whenever only one (arbitrary) point in the solution space is picked for interpretation. Furthermore, we discuss whether economically meaningful parameter value changes exist which would enforce uniqueness in all components of the solution.
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Cites work
- scientific article; zbMATH DE number 53115 (Why is no real title available?)
- A Mixed Complementarity-Based Equilibrium Model of Natural Gas Markets
- Benders decomposition for multi-stage stochastic mixed complementarity problems -- applied to a global natural gas market model
- Endogenous production capacity investment in natural gas market equilibrium models
- Network Cournot competition
- Solving stochastic complementarity problems in energy market modeling using scenario reduction
Cited in
(14)- Lumpy investment in regulated natural gas pipelines: an application of the theory of the second best
- A Mixed Complementarity-Based Equilibrium Model of Natural Gas Markets
- Solving oligopolistic equilibrium problems with convex optimization
- scientific article; zbMATH DE number 2034472 (Why is no real title available?)
- Corrigendum to ``Benders decomposition for multi-stage stochastic mixed complementarity problems -- applied to a global natural gas market model
- Equilibria in investment and spot electricity markets: a conjectural-variations approach
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- The cost of decoupling trade and transport in the European entry-exit gas market with linear physics modeling
- Multicriteria analysis of natural gas destination in Brazil: An application of the TODIM method
- Strategic investment decisions in an oligopoly with a competitive fringe: an equilibrium problem with equilibrium constraints approach
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