Discriminatory Versus Uniform-Price Electricity Auctions with Supply Function Equilibrium

We use experiments to study market power with supply function competition, akin to the competition in electricity markets. Our treatments vary the distribution of demand levels as well as the amount and symmetry of the allocation of production capacity between different suppliers. We relate our results to a descriptive power index and to the predictions of two models: a supply function equilibrium (SFE) model and a multi-unit auction (MUA) model. Observed behaviour is consistent with the equilibria of the unrestricted SFE model and inconsistent with the unique equilibria of two refinements of the SFE model and of the MUA model.

Competition and Cooperation in Divisible Good Auctions: An Experimental Examination

Oligopoly models for market price of electricity under demand uncertainty and unit reliability

Electricity market modelling with photovoltaic active and reactive power generation

Supply function equilibria: Step functions and continuous representations

An experimental approach is used to compare bidding behavior and auction performance in uniform-price and discriminatory auctions when there is incomplete information concerning the common value of the auctioned good. In a symmetric information environment, the different auction formats provide the same average revenue. However, when information is asymmetric the discriminatory auction results in higher average revenue than the uniform-price auction. The volatility of revenue is higher in the uniform-price auctions in all treatments. The results, therefore, provide support for the use of the discriminatory format. Subject characteristics and measures of experience in recent auctions are found to be useful in explaining bidding behavior.

Cournot Versus Supply Functions: What Does the Data Tell Us?

Global Trends in IPO Methods: Book Building vs. Auctions with Endogenous Entry

Journal Article Auctions with Resale Markets: An Exploratory Model of Treasury Bill Markets Get access Sushil Bukhchandani, Sushil Bukhchandani University of California, Los Angeles Search for other works by this author on: Oxford Academic Google Scholar Chi-fu Huang Chi-fu Huang Massachusetts Institute of Technology Search for other works by this author on: Oxford Academic Google Scholar The Review of Financial Studies, Volume 2, Issue 3, July 1989, Pages 311–339, https://doi.org/10.1093/rfs/2.3.311 Published: 05 May 2015

Estimating market power in the presence of capacity constraints: An application to high-fructose corn sweetener

Contractual arrangement plays an important role in mitigating market power in electricity markets. The issue of whether rational generators would voluntarily enter contract markets through a strategic incentive is examined, and the factors which could affect this strategic contracting behaviour. A two-stage game model is presented to formulate the competition of generators in bid-based pool spot markets and contract markets, as well as the interaction between these two markets. The affine supply function equilibrium (SFE) method is used to model competitive bidding for the spot market, while the contract market is modelled with the general conjectural variation method. The proposed methodology allows asymmetric, multiple strategic generators having capacity constraints and affine marginal costs with non-zero intercepts to be taken into account. It is shown that the presence of forward contract markets will complicate the solution to the affine SFE, and a new methodology is developed in this regard. Strategic contracting behaviours are analysed in the context of asymmetric, multiple strategic generators. A numerical example is used to verify theoretical results. It is shown that the observability of contract markets plays an important role in fostering generators' strategic contracting incentive, and that this contracting behaviour could also be affected by generators' cost parameters and demand elasticity.

In this paper, we solve a production planning problem that has a direct bearing on the cost to a facility of vendor quality and reliability. This solution is also an important first step in solving the multi-plant coordination problem. We consider a manufacturing facility with one critical raw material, and one or more products whose demand needs to be met. It is assumed that demand for finished goods and the arrival process for raw material are stochastic. We calculate simultaneously the optimal production level, and the raw material order quantity which minimize the total expected cost subject to capacity and release level constraints. The results obtained by our model (the integrated model) show that the production level should be no larger than the production level obtained by solving the traditional (nonintegrated) models, and that major savings are obtained by solving the integrated model. We are also able to characterize and evaluate the cost of reliable supplies of raw material. In addition we solve the above problem in the presence of capacity constraints. A procedure which allocates capacity to different products is presented.

In this paper, a novel conjectured supply function equilibrium (CSFE) based model is presented for simulating strategic interactions among generation companies (GenCos) in an electricity market under incomplete information. The model is derived theoretically from the well-acknowledged supply function equilibrium theory, and a general supply function for a GenCo is obtained based on its conjectural variation of the rivals' accumulated response to a change in the market price. The CSFE is a general and flexible model for simulating strategic behaviors of GenCos in an electricity market with inelastic demand. Supply functions will be linear when GenCos hold constant conjectures, and a unique equilibrium exists when linear supply functions are provided to the market. Finally, the IEEE 30-bus system is used to show the essential features of the proposed model.

This paper introduced the conjectured supply function equilibrium based model in order to construct the company's strategy model under the incomplete information. It can be used to apply in the market with inelastic electricity demand and it is more suitable to evaluate potential market power existed in real electricity market. On the basis of supply function equilibrium theory, it gives out the optimized supply function of the company. In this paper we used the econometrics models and methods to analyse the prediction based on the conjectured supply function equilibrium model, and compared the theoretical optimum supply function to the actual function with the use of nonparametric models, which certified the validity of the model and analyzed the conduct of the generation firms.

As an effective measure of demand response programs, interruptible load management has been widely used in electricity markets. This paper addresses the problem of what impacts of interruptible load (IL) contracts will have on the equilibrium outcomes of electricity wholesale markets. First, a market demand model is developed to take considerations of IL contracts. Next, a linear supply function equilibrium model is presented for wholesale markets with IL contracts. The introduction of IL contracts leads to a non-smooth equilibrium problem. To solve this equilibrium problem, a novel solution method is proposed. Finally, numerical examples are presented to verify the effectiveness of the method, in which the uncertainty in market demand is considered to further reflect IL contracts' flexibility. It is shown that with IL contracts, market price and its fluctuation can be lowered. This effect is more obvious when the uncertainty in market demand is relatively large. Furthermore, to achieve the target of lowering market price and its fluctuation, the interruption threshold prices in the IL contracts should be determined carefully.