Possibilistic Cournot equilibrium for electricity markets

Abstract

Cournot non-cooperative game theory is one of the theoretical approaches more used to model market behavior in the electricity industry. However this approach is highly influenced by the residual demand curves of the market agents, which are usually not precisely known. Imperfect information has normally been modeled with Probability Theory, accepting to treat it as randomness. However, Possibility Theory might sometimes be more helpful than Probability Theory in modeling uncertainty, imprecision and vagueness. A Possibilistic Cournot equilibrium formulation is proposed, and two dual and complementary approaches are applied to simplify from fuzzy to deterministic, to compute a robust solution, when the residual demand uncertainty is modeled with a possibility distribution