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A Maximum Quantity Formulation of the Cournot Game for ISO/Pool Operation

This paper studies the economic equilibrium power pool with aggregated demand, Cournot generators and an independent system operator with no secondary market for transmission capacity. The independent system operator manages congestion by attempting to deliver maximum quantity at least cost. The paper formulates a non-cooperative game between suppliers as a maximum total quantity problem subject to network flow constraints and supplier first order profit maximizing conditions. The paper shows that unconstrainted solutions to the proposed formulation are Nash equilibriums and supplier profits are mutually maximized. Numerical examples demonstrate a supplier selection policy that is based on their contributions to network flows. This policy will drive the network to the maximum quantity solution without further intervention.