Submission · anonymous

Complementarity, Not Optimization, is the Language of Markets

This paper argues that the natural language of electricity markets is complementarity, not optimization. While market clearing is often formulated as a social welfare maximization problem, the underlying equilibrium conditions are complementarity conditions derived from KKT optimality. The paper presents both energy-only and network-constrained market models, derives their KKT/complementarity conditions, and solves them as linear complementarity problems (LCPs) to find market equilibria including locational marginal prices.