We consider a pool type electricity market in which generators bid pricesin a sealed bid form and are dispatched by an independent system operator (ISO). In ourmodel, demand is inelastic and the ISO allocates production to minimize the systemcosts while considering the transmission constraints. In a departure from received literature,the model incorporates explicit description of the network details. The analysisshows that losses along transmission lines render the market imperfectly competitive.Indeed, competition among generators is qualitatively similar to the interaction amongfirms in amonopolistic competition setting.Alower bound formarket prices is derivedand it is shown that the costumers’ cost of oligopolistic pricing is strictly positive. Ata methodological level, we generalize standard oligopoly theory tools.
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