Decentralized electricity market price dynamics

The fundamental Walrasian model of resource allocations can be replaced by a decentralized dynamical model. In a decentralized dynamic model, price plays the role of control and coordination of players´ actions. Economic market dynamics is commonly studied from the stability viewpoint. Market price over a period of time is determined by the interaction of the market supply and market demand. Movements between equilibrium must be explained utilizing comparative static analysis. But, when time is explicit in the system, dynamic analysis must replace the latter method. The ability of the system to successfully navigate between points of equilibrium is known as dynamic stability. In this document, price market dynamics is emphasized as the bidding iterative process associated to each trading period. Additional properties can be studied under the dynamic framework in order to achieve market efficiency. Controllability, observability, and reachability may help to monitor market dynamics. Market monitoring covers financial and physical market activities. Numerical examples are provided to illustrate the market dynamics properties. Finally, some related issues are discussed and conclusions are presented.