## 1 Introduction
[12] examined the electricity market design in China, including also the role of bilateral contracts, as the power exchange market of China considers bilateral contracts for long-term trading and double-sided auctions for short-term trading and the spot market. The competition of wholesale and retail markets is linked with the existence of companies with dominant positions as well as with the existence of companies with vertical integration in production, transmission/distribution, and retail sector. Market liberalization might include full-scale retail deregulation, restrictions on tariffs by dominant players, as well as unbundling of electricity generation from the transmission and distribution (T&D) sectors. [PERSON] and [PERSON] [13] provided an overview of the status of the wholesale and retail electricity markets in Japan, also describing the Electricity System Reform policy, with the aim to provide insights on whether final consumers would benefit from this process. Market reforms also considered techno-economic characteristics of the power system. [PERSON] et al. [14] identified the need for technical constraints towards a robust co-optimization of energy and reserves in real-time electricity markets Market reform might also include the adoption of other market algorithms for the clearing of the day-ahead market. [PERSON] and [PERSON] [15] examined the adoption of the Pan-European Hybrid Electricity Market Integration Algorithm (EUPHEMIA) in the Greek electricity market, aiming to quantify the effects of different order types as well as of the strategy of a market participant with the dominant position. The paper identifies in its conclusions the need to focus more on the impact of bilateral contracts. The model developed in a recent paper [15] is further extended to incorporate the impact of bilateral contacts, which is a supplementary mechanism to the energy exchange that clears the wholesale market. The critical question that is addressed is if the liquidity of bilateral contracts among retailers and producers affects the wholesale market, namely the price signal of the energy exchange as well as the energy mix per technology and per producer. The methodology used in the paper builds on the work done at the Energy and Environmental Policy Laboratory of the University of Piraeus on unit commitment modelling [16; 17], as well as on the European market clearing algorithm [15; 18]. The simulations have been done by an optimization model that provides the economic dispatch and clearing of the day-ahead electricity market. The model incorporates bilateral contracts with committed generating capacity from producers, as well as dynamic bidding strategy per market participant. The literature review has revealed that the impact of bilateral contracts has not been thoroughly examined. The research focuses mainly on the maximization of profits of market participants, as well as the tackling of their risk from participating in an organized energy exchange/pool together with trading using bilateral contracts. The impact of bilateral contracts in the wholesale market has not been examined, to our knowledge. Moreover, the existence of market participants with a dominant position that could use bilateral contracts as a tool to manipulate the wholesale market has not been examined. In such cases, the level of bilateral contracts is an important decision by the regulator. Therefore, the paper contributes to the literature by quantifying the impact of bilateral contracts on wholesale electricity markets in the case where a market participant has the dominant position. Moreover, the paper contributes to the literature by incorporating dynamic bidding of the market participants, supplementary to the sensitivity analysis on bilateral contracts. The paper provides useful insights into the design of electricity markets, especially in case of designing voluntary energy exchanges where a market participant has the dominant position.