Header

UZH-Logo

Maintenance Infos

Bidding asymmetries in multi-unit auctions: implications of bid function equilibria in the British spot market for electricity


Crawford, Gregory S; Crespo, Joseph; Tauchen, Helen (2007). Bidding asymmetries in multi-unit auctions: implications of bid function equilibria in the British spot market for electricity. International Journal of Industrial Organization, 25(6):1233-1268.

Abstract

This paper introduces and tests Bid Function Equilibria (BFE) in the British spot market for electricity. BFE extend von der Fehr and Harbord's (1993) multi-unit auction model of wholesale electricity markets by allowing firms to have heterogeneous costs for different generating units. Pure-strategy equilibria in BFE predict asymmetric bidding by producers: a single firm (the “price-setter") bids strategically while other firms (“non-price-setters") bid their costs. We test for asymmetries in firms' bid functions in the British spot market between 1993 and 1995 and find strong empirical support for the theory. We conclude that BFE have important implications for the design and governance of electricity markets.

Abstract

This paper introduces and tests Bid Function Equilibria (BFE) in the British spot market for electricity. BFE extend von der Fehr and Harbord's (1993) multi-unit auction model of wholesale electricity markets by allowing firms to have heterogeneous costs for different generating units. Pure-strategy equilibria in BFE predict asymmetric bidding by producers: a single firm (the “price-setter") bids strategically while other firms (“non-price-setters") bid their costs. We test for asymmetries in firms' bid functions in the British spot market between 1993 and 1995 and find strong empirical support for the theory. We conclude that BFE have important implications for the design and governance of electricity markets.

Statistics

Citations

Dimensions.ai Metrics

Altmetrics

Downloads

1 download since deposited on 25 Sep 2019
0 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Industrial Relations
Physical Sciences > Aerospace Engineering
Social Sciences & Humanities > Economics and Econometrics
Social Sciences & Humanities > Economics, Econometrics and Finance (miscellaneous)
Social Sciences & Humanities > Strategy and Management
Physical Sciences > Industrial and Manufacturing Engineering
Uncontrolled Keywords:Strategy and management, industrial and manufacturing engineering, industrial relations, aerospace engineering
Language:English
Date:December 2007
Deposited On:25 Sep 2019 10:44
Last Modified:31 Jul 2020 03:40
Publisher:Elsevier
ISSN:0167-7187
OA Status:Closed
Publisher DOI:https://doi.org/10.1016/j.ijindorg.2006.10.001

Download

Closed Access: Download allowed only for UZH members