Title

A Market-Based Optimization Algorithm for Distribution Systems

Publication Type

Journal Article

Publication Date

2007

Abstract

In this paper, a market-based decomposition method for decomposable linear systems is developed. The solution process iterates between a master problem that solves the market-matching problem, and subproblems that solve the agents’ bundle-determination problems. Starting from any initial price and feasible allocation, system optimality can be achieved under a dynamic market-trading algorithm in a finite number of trades. The final market-clearing prices are discovered by this market trading and an efficient allocation is achieved by direct, wealth-improving resource exchanges among self-interested agents. Certain types of strategic behavior by the agents and a dealer in the marketplace are studied as well. Our proposed market mechanism addresses price dynamics, incentive issues, and economic transactions of real-world, distributed decision-making situations more realistically than traditional decomposition approaches. In addition, it can be operated in both synchronous and asynchronous environments. We provide a market-based paradigm for decentralized problem solving and information processing that can be easily implemented to support real-time optimization of distributed systems.

Keywords

market-based, decomposition, algorithm, distributed systems, resource allocation

Discipline

Computer Sciences | Numerical Analysis and Scientific Computing

Research Areas

Information Systems and Management

Publication

Management Science

Volume

53

Issue

8

First Page

1345

Last Page

1358

ISSN

0025-1909

Identifier

10.1287/mnsc.1060.0690

Publisher

INFORMS

Additional URL

http://dx.doi.org/10.1287/mnsc.1060.0690