Working Paper Series,
Uppsala University, Department of Economics

Abstract: In a real-time electric power auction, the bids of producers consist of committed supply as a function of price. The bids are submitted under uncertainty, before the demand by the Independent System Operator has been realized. In the Supply Function Equilibrium (SFE), every producer chooses the supply function maximizing his expected profit given his residual demand. I consider a uniform-price auction with a reservation price, where demand is inelastic and exceed the market capacity with a positive probability, and firms have identical constant marginal costs but asymmetric capacities. I show that under these conditions, there is a unique SFE, which is piece-wise symmetric.

Keywords: supply function equilibrium; uniform-price auction; uniqueness; asymmetry; oligopoly; capacity constraint; wholesale electricity market

JEL-codes: C62; D43; D44; L11; L13; L94

27 pages, April 18, 2005

Full text files

FULLTEXT01.pdf  

Download statistics

• Uppsala University, Department of Economics
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Ulrika Öjdeby ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:uunewp:2005_016This page generated on 2024-09-13 22:17:37.