Understanding cross-market strategic behaviors of prosumers: An equilibrium-driven evolutionary game approach

Abstract

The rise of prosumers and the success of the sharing economy have catalyzed the development of energy sharing market (ESM), which is set to coexist with the conventional distribution energy market (DEM). However, the behaviors of prosumers within this evolving landscape remain underexplored due to the complex interactions among prosumers, ESM, and DEM. This paper presents a novel equilibrium-driven evolutionary game (EDEG) model that allows prosumers with bounded rationality to trade energy and choose participation in DEM, ESM, or both. Unlike previous studies, prosumers’ profits in this model are determined by the market-clearing equilibria, which in turn influence their market selection. The prosumers’ bidding strategies make the market clearing a hard-solving generalized Nash game (GNG). To overcome this, we convert the GNG into an equivalent, more tractable optimization problem, and then incorporate the generalized Nash equilibrium (GNE) into the EDEG model. Building on this foundation, we derive a solution algorithm and establish sufficient convergence conditions for the model. Additionally, by analyzing the equilibria, the EDEG model sheds light on the prosumers’ market selection preferences, cross-market strategic behaviors, sharp price jumping in ESM, and the conditions necessary for the stable coexistence of ESM and DEM. Furthermore, an improved pricing scheme for DEM is proposed to mitigate cross-market arbitrage behaviors and alleviate market price volatility. Finally, the simulations of six prosumer groups over 10,000 days (approximately 27.4 years) validate the theoretical findings and show the effectiveness of the improved scheme in suppressing cross-market arbitrage and stabilizing the electricity price for ESM.