Work

On a tractable single-level reformulation of a multilevel model of the European entry-exit gas market with market power

Year: 2025

Type: article

Abstract: We propose a framework that allows to quantitatively analyze the interplay of the different agents involved in gas trade and transport in the context of the European entry-exit system. Previous contributions have focused on the case of perfectly competitive buyers and sellers of gas, which allows to replace the respective market equilibrium problem by a single welfare maximization problem. Our novel framework considers the mathematically more challenging case of a monopolistic and thus strategic gas seller. In this framework, the objective functions of the gas sellers and buyers cannot be aggregated into a common objective function, which is why a multilevel formulation is necessary to accurately capture the sequential nature of the decisions taken. For this setup, we derive sufficient conditions that allow for reformulating the challenging four-level model as a computationally tractable single-level reformulation. We prove the correctness of this reformulation and use it for solving several test instances to illustrate the applicability of our approach.

Source: Journal of Global Optimization

DOI: 10.1007/s10898-025-01475-8

Authors: Veronika Grimm, Julia Grübel, Martin Schmidt, Alexandra Schwartz, Ann-Kathrin Wiertz, Gregor Zöttl

Institutions: University of Technology Nuremberg, Universität Trier, Technische Universität Dresden, Friedrich-Alexander-Universität Erlangen-Nürnberg

Language: English

Topic: Advanced Optimization Algorithms Research

Subfield: Numerical Analysis

Field: Mathematics

Domain: Physical Sciences

Open Access status: hybrid

Estimated APC paid: $2,990

Funders: Universität Trier, Deutsche Forschungsgemeinschaft