Working Paper Series
The Supply Function Equilibrium and Its Policy Implications for Wholesale Electricity Auctions
() and David Newbery
Abstract: The supply function equilibrium provides a game-theoretic
model of strategic bidding in oligopolistic wholesale electricity auctions.
This paper presents an intuitive account of current understanding and shows
how welfare losses depend on the number of firms in the market and their
asymmetry. Previous results and general recommendations for
divisible-good/multi-unit auctions provides guidance on the design of the
auction format; setting the reservation price; the rationing rule; and
restrictions on the offer curves in wholesale electricity auctions.
Keywords: Wholesale Electricity Markets; Supply Function Equilibria; Competition Policy; (follow links to similar papers)
JEL-Codes: C62; D43; D44; L94; (follow links to similar papers)
45 pages, November 5, 2009
Before downloading any of the electronic versions below
you should read our statement on
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
- This paper is published as:
Holmberg, Pär and David Newbery, (2010), 'The Supply Function Equilibrium and Its Policy Implications for Wholesale Electricity Auctions', Utilities Policy, Vol. 18, December, No. 4, pages 209-226
Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design by Joachim Ekebom