The Impact of Collusion on Bilateral Negotiation in Direct Electricity Purchase Market

Collusion is a critical problem in the electricity market, which probably undermines the stability and equity of the market operation. In this study we study the collusion during bilateral negotiations in the direct electricity purchase market. Firstly, a multiple to multiple (MTM) model of bilateral negotiation in direct electricity purchase market is built based on the traditional Rubinstein negotiation model. Then, we divide collusion into two categories. Specifically, collusion can be divided into two categories. One is based on pre-specified information and the other is based on process communication. Then, the bidding strategies under the above two collusions are studied in detail. Finally, the effect of collusion on the market is analyzed through simulations and regulatory proposals are proposed.