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Competitive Bidding Behavior In Uniform-Price Auction Markets, Peter Cramton
Competitive Bidding Behavior In Uniform-Price Auction Markets, Peter Cramton
Peter Cramton
For Duke Energy.
Rebuttal Addendum: Assessment Of Submissions Of The California Parties, Peter Cramton
Rebuttal Addendum: Assessment Of Submissions Of The California Parties, Peter Cramton
Peter Cramton
No abstract provided.
Competitive Bidding Behavior In Uniform-Price Auction Markets, Peter Cramton
Competitive Bidding Behavior In Uniform-Price Auction Markets, Peter Cramton
Peter Cramton
Profit-maximizing bidding in uniform price auction markets involves bidding above marginal cost. It therefore is not surprising that such behavior is observed in electricity markets. Common bidding behavior such as “hockey stick” bids easily are explained by suppliers determining their supply offers to maximize profits. This incentive to bid above marginal cost is not the result of coordinated action among the bidders. Rather, each bidder is independently selecting its bid to maximize profits based on its estimate of the residual demand curve it faces. Profit-maximizing bidding does not mean that “the sky’s the limit.” Typically, bidders are limited in how …
Electricity Market Design: The Good, The Bad, And The Ugly, Peter Cramton
Electricity Market Design: The Good, The Bad, And The Ugly, Peter Cramton
Peter Cramton
This paper examines principles of market design as applied to electricity markets. I illustrate the principles with examples of both good and bad designs. I discuss one of the main design challenges—dealing with market power. I then discuss FERC’s choice of a standard market design.