Issue: 2009/Vol.19/No.4, Pages 125-140
A COMPENSATION-BASED PRICING SCHEME IN MARKETS WITH NON-CONVEXITIES
Cite as: I. Żółtowska, E. Toczyłowski. A compensation-based pricing scheme in markets with non-convexities. Operations Research and Decisions 2009: 19(4), 125-140.
A compensation-based pricing scheme is a market clearing mechanism that may be applied when a uniform, linear pricing scheme cannot support equilibrium allocations in the auction markets. We analyze extensions of our previously proposed pricing scheme  to include various possible representations of bids that reflect some non-convex costs and constraints. We conclude with a discussion on directions for future research.
Keywords: auction design, electricity market, non-convex bids, minimum profit condition, unit commitment constraints