2006–2010

Supply Function Equilibria of Pay-as-Bid Auctions

Särtryck nr 2009:30

Författare: Pär HolmbergÅr: 2009 Publikation: Journal of Regulatory Economics Årgång (nr): 36 (2) Sidor: 154–177
Artikeln online (behörighet kan krävas)


This paper characterizes the Nash equilibrium in a pay-as-bid (discriminatory), divisible-good, procurement auction, Demand by the auctioneer is uncertain as in the supply function equilibrium model. A closed form expression is derived for a one shot game. Existence of an equilibrium is ensured if the hazard rate of the demand distribution is monotonically decreasing with respect to the shock outcome and sellers have non-decreasing marginal costs. Multiple equilibria can be ruled out for markets, for which the auctioneer's demand exceeds suppliers' capacity with a positive probability. The derived equilibrium can be used to model strategic bidding behavior in pay-as-bid electricity auctions, such as the balancing mechanism of United Kingdom. Offer curves and mark-ups of the derived equilibrium are compared to results for the SFE of a uniform-price auction.


Referens:
Holmberg, Pär (2009), "Supply Function Equilibria of Pay-as-Bid Auctions". Journal of Regulatory Economics 36(2), 154–177.

Pär Holmberg

Kontakt

Tel: 08 665 4559
Mobil: 072 511 6866
Par.Holmberg@ifn.se

Aktuell forskare

Nikita Koptyug

Forskningsområden:  industriell organisation och spelteori.

Några av de frågor Nikita Koptyug försöker besvara med sin forskning:

  • Vilken information använder konsumenter när de fattar beslut om köp av produkter?
  • Kan tillförlitlig information minska asymmetriproblem mellan professionella och icke-professionella köpare?

IFN kalendarium

Institutet för Näringslivsforskning, Grevgatan 34 - 2 tr, Box 55665, SE-102 15 Stockholm, Sweden | Tel: +46-(0)8-665 45 00 | info@ifn.se