Competition in both quantity and quality: spatial competition models with regulated transportation prices

An oligopoly with spatially dispersed producers and consumers and with multi-period demands is modeled in the paper. Generation firms compete both in quantity and in quality for electricity supply. That is, they compete in generation capacity and electric energy supply as well as in reserved capacity demanded by consumers for reliability. Two models are formulated under the following underlying assumptions on oligopolistic competition: (1) Ramsey model; (2) the producers are assumed to behave in the Cournot manner with regulated transportation prices. Variational inequality approach is used for computing equilibria of the model. These models are applied to simulate the long run electricity market.