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| Content Provider | Springer Nature Link |
|---|---|
| Author | Holmberg, Pär |
| Copyright Year | 2009 |
| Abstract | This paper characterizes the Nash equilibrium in a pay-as-bid (discriminatory), divisible-good, procurement auction. Demand by the auctioneer is uncertain as in the supply function equilibrium model. A closed form expression is derived for a one shot game. Existence of an equilibrium is ensured if the hazard rate of the demand distribution is monotonically decreasing with respect to the shock outcome and sellers have non-decreasing marginal costs. Multiple equilibria can be ruled out for markets, for which the auctioneer’s demand exceeds suppliers’ capacity with a positive probability. The derived equilibrium can be used to model strategic bidding behavior in pay-as-bid electricity auctions, such as the balancing mechanism of United Kingdom. Offer curves and mark-ups of the derived equilibrium are compared to results for the SFE of a uniform-price auction. |
| Starting Page | 154 |
| Ending Page | 177 |
| Page Count | 24 |
| File Format | |
| ISSN | 0922680X |
| Journal | Journal of Regulatory Economics |
| Volume Number | 36 |
| Issue Number | 2 |
| e-ISSN | 15730468 |
| Language | English |
| Publisher | Springer US |
| Publisher Date | 2009-03-17 |
| Publisher Place | Boston |
| Access Restriction | One Nation One Subscription (ONOS) |
| Subject Keyword | Supply function equilibrium Pay-as-bid auction Discriminatory auction Divisible good auction Oligopoly Electricity market Microeconomics Public Finance & Economics Industrial Organization |
| Content Type | Text |
| Resource Type | Article |
| Subject | Economics and Econometrics |
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