The stability of power system markets

Market equilibrium conditions can be derived from more general dynamic equa tions describing the marketplace. Dynamic equations provide insights into t he behavior and stability of markets which are not available from static mo dels. For example, markets with a single supplier with declining linear cos ts (economies of scale) may or may not be stable, depending on specific cos t characteristics. Markets with more than one supplier with declining linea r costs are always unstable. This paper illustrates a situation where the r emoval of congestion makes a market unstable.