New behavioral indices for analyzing locational aspects of market power in Transmission-Constrained electricity markets

Market power remains a central threat to competition in electricity markets. We construct computation-based indices that quantify the realized locational impact of physical and financial withholding, grounded in an explicit bid-acceptance model and dual-based locational marginal prices (LMPs). This study introduces new indices to monitor locational market power in transmission-constrained electricity markets, crucial for fostering fair competition. These indices assess strategies used by market participants to influence prices, including both physical and financial withholding. The introduced locational market power indices help in identifying bidding patterns that lead to unfavorable market equilibria and LMPs. An augmented Lerner index is also proposed to measure the price markups from anti-competitive strategies. Furthermore, this research presents indices for examining surplus deviations and market fairness, along with a refined method for evaluating bid submissions. These tools enable regulators to effectively mitigate market power issues. Validation with the IEEE 57-bus test system proves the accuracy of these indices, with additional sensitivity analysis confirming their robust applicability.