The incentive is to sell all 100 units for £infinity. The incentive for the seller to sell at a high price isn't relevant. They don't have the ability to act on it. If they did, they wouldn't stop at £10,000. I'd pick numbers like £1,000,000,000,000 at a minimum if I was a seller and could truly set my own price based on my incentives.

That’s the beauty. The same company owns both the cheap cost one and can limit the supply just enough to keep the profit maximised.

There isn’t an ideal free market in electricity generation.

If the UK has banned all companies except one from supplying electricity then they will without doubt see eye watering prices. But that has nearly nothing to do with the pricing scheme they use and a lot to do with the one company part of the picture.

It hasn’t, howver the natural state for these companies is to merge and diversify to maximise their profits, and the cost of entry into electicity generation is not like launching a bbc backed startup.