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Full-Text Articles in Behavioral Economics
Theoretical And Experimental Analysis Of Auctions With Negative Externalities, Youxin Hu, John Kagel, Lixin Ye
Theoretical And Experimental Analysis Of Auctions With Negative Externalities, Youxin Hu, John Kagel, Lixin Ye
Youxin Hu
We investigate a model in which a single bidder (the “entrant”), on winning the auction, imposes a negative externality on two “regular” bidders. In an ascending price clock auction, in equilibrium when all bidders are active a regular bidder free rides, dropping out before reaching his private value. Despite this free riding problem, in almost all cases, the item is ex post efficiently assigned. In contrast, in a first-price sealed bid auction incentives for free riding and aggressive bidding coexist, leading to a lower ex post efficiency. The experiment shows minimal free riding in the clock auction, but as predicted, …
Virtual Power Plant Auctions, Peter Cramton, Lawrence Ausubel
Virtual Power Plant Auctions, Peter Cramton, Lawrence Ausubel
Peter Cramton
Since their advent in 2001, virtual power plant (VPP) auctions have been implemented widely. In this paper, we describe the simultaneous ascending-clock auction format that has been used for virtually all VPP auctions to date, elaborating on other design choices that most VPP auctions have had in common as well as discussing a few aspects that have varied significantly among VPP auctions. We then evaluate the various objectives of regulators in requiring VPP auctions, concluding that the auctions have been effective devices for facilitating new entry into electricity markets and for developing wholesale power markets.