Analysis of the network constraints' effects on strategic behavior in an incomplete information environment

This paper analyzes the network constraints' effects on power suppliers' strategic behaviors and the market equilibrium. Observing the fact that the trading schedules determined by MCP have to be adjusted or curtailed due to the network constraints, we investigate different curtailment criterions' impacts on the final market equilibrium. We find that due to the network constraints, the final equilibrium will be quite different from the initial equilibrium. The result indicates that bidders have incentives to mark up their bids remarkably above their production costs. The Bayesian approach is used to deal with incomplete information and we find that bidders will make relatively conservative decisions compared with complete information.