Since 2014
An Experimental Study of Complex-Offer Auctions from Wholesale Energy Markets
Applied Economics and Finance
View Archive Info| Field | Value | |
| Title |
An Experimental Study of Complex-Offer Auctions from Wholesale Energy Markets
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| Creator |
Baltaduonis, Rimvydas
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| Description |
A Payment Cost Minimization auction has been proposed as an alternative to the Offer Cost Minimization auction for use in wholesale electric power markets with an intention to lower procurement cost of electricity. Efficiency concerns have been raised for this proposal while assuming that the true production costs would be revealed to the auctioneer in a competitive market. Using an experimental approach, the study compares the performance of these two complex-offer auctions, controlling for the level of unilateral market power. The analysis finds that neither auction results in allocations that correspond to the true cost revelation. Two auctions perform similarly in terms of procurement cost and efficiency. Surprisingly, consumer prices in a competitive environment approach the prices of an environment with market power. It appears that the expected institutional effects for procurement cost and efficiency are greatly dominated by the effects of anti-competitive behavior due to the offer complexity and a cyclical nature of market demand.
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| Publisher |
Redfame Publishing
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| Contributor |
National Science Foundation, International Foundation for Research in Experimental Economics
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| Date |
2014-05-02
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion Peer-reviewed Article |
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| Format |
application/pdf
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| Identifier |
http://redfame.com/journal/index.php/aef/article/view/385
10.11114/aef.v1i1.385 |
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| Source |
Applied Economics and Finance; Vol 1, No 1 (2014); 96-115
2332-7308 2332-7294 |
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| Language |
eng
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| Relation |
http://redfame.com/journal/index.php/aef/article/view/385/486
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