Details

Autor(en) / Beteiligte

• O'Neill, Richard P.
• Sotkiewicz, Paul M.
• Hobbs, Benjamin F.
• Rothkopf, Michael H.
• Stewart, William R.

Titel

Efficient market-clearing prices in markets with nonconvexities

Ist Teil von

• European journal of operational research, 2005-07, Vol.164 (1), p.269-285

Ort / Verlag

Amsterdam: Elsevier B.V

Erscheinungsjahr

2005

Link zum Volltext

Quelle

Alma/SFX Local Collection

Beschreibungen/Notizen

• This paper addresses the existence of market clearing prices and the economic interpretation of strong duality for integer programs in the economic analysis of markets with nonconvexities (indivisibilities). Electric power markets in which nonconvexities arise from the operating characteristics of generators motivate our analysis; however, the results presented here are general and can be applied to other markets in which nonconvexities are important. We show that the optimal solution to a linear program that solves the mixed integer program has dual variables that: (1) have the traditional economic interpretation as prices; (2) explicitly price integral activities; and (3) clear the market in the presence of nonconvexities. We then show how this methodology can be used to interpret the solutions to nonconvex problems such as the problem discussed by Scarf [Journal of Economic Perspectives 8(4) (1994) 111].