Scandinavian Working Papers in Economics
Working Paper Series,
Uppsala University, Department of Economics
No 2005:17: Comparing Supply Function Equilibria of Pay-as-Bid and Uniform-Price Auctions
Pär Holmberg ()
Additional contact information
Pär Holmberg: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Abstract: This paper derives a Supply Function Equilibrium (SFE) of a pay-as-bid auction, also called discriminatory auction. Such an auction is used in the balancing market for electric power in Britain. For some probability distributions of demand a pure-strategy equilibrium does not exist. If demand follows an inverse polynomial probability distribution, SFE always exists. Assuming this probability distribution, the pay-as-bid procurement auction is compared to a SFE of a uniform-price procurement auction, the auction form of most electric power markets. The demand-weighted average price is found to be equal or lower in the pay-as-bid procurement auction.
Keywords: Supply function equilibrium; pay-as-bid auction; uniform-price auction; discriminatory auction; oligopoly; capacity constraint; wholesale electricity market
JEL-codes: C62; D43; D44; L11; L13; L94
25 pages, May 16, 2005
Full text files
FULLTEXT01.pdf
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_017This page generated on 2024-09-13 22:17:37.