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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Bidding asymmetries in multi-unit auctions: implications of bid function equilibria in the British spot market for electricity |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | International Journal of Industrial Organization |
| Publisher | Elsevier |
| Geographical Reach | international |
| ISSN | 0167-7187 |
| Volume | 25 |
| Number | 6 |
| Page Range | 1233 - 1268 |
| Date | 2007 |
| Abstract Text | This paper introduces and tests Bid Function Equilibria (BFE) in the British spot market for electricity. BFE extend von der Fehr and Harbord's (1993) multi-unit auction model of wholesale electricity markets by allowing firms to have heterogeneous costs for different generating units. Pure-strategy equilibria in BFE predict asymmetric bidding by producers: a single firm (the “price-setter") bids strategically while other firms (“non-price-setters") bid their costs. We test for asymmetries in firms' bid functions in the British spot market between 1993 and 1995 and find strong empirical support for the theory. We conclude that BFE have important implications for the design and governance of electricity markets. |
| Digital Object Identifier | 10.1016/j.ijindorg.2006.10.001 |
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| Keywords | Strategy and management, industrial and manufacturing engineering, industrial relations, aerospace engineering |