Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

This study has presented and experimented possible types of price bidding strategies in Korean wholesale power industry. One of the important contributions of this study is to discuss bidding strategies under repeated market transactions with incomplete information. Three types of the bidding strategies are explored. One type of bidding strategy is that each participant learns rivals' strategies from the equilibrium price in the repeated daily electricity auction following Bayesian learning process. A series of Bayesian equilibrium price was estimated using the Kalman filtering technique and compared to that from Cournot model. Linear Markov strategy is interpreted as one of strategies that market participants would take as they want to keep market shares as constant. The last is to choose price-cost margins as strategic choice variables. The price-cost margin strategy seems to be easy to pick and form a focal point among market participants.