A mo re e ffic ie nt pro c ure me nt me c ha nism fo r re se rve c - - PowerPoint PPT Presentation
A mo re e ffic ie nt pro c ure me nt me c ha nism fo r re se rve c a pa c ity K a i F linke rb usc h, We stf lisc he Wilhe lms-Unive rsit t, Mnste r T he Ge rma n e le c tric ity ma rke t Spo t- a nd F o rwa rd ma rke ts Ga te
K a i F linke rb usc h, We stfä lisc he Wilhe lms-Unive rsitä t, Münste r
K a i F linke rb usc h 2
Pro c ure me nt a uc tio ns fo r re se rve c a pa c ity
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 3
SO spe c ifie s a mo unt o f c a pa c ity (in MW)
SO c ho o se s lo we st b ids
Pa y-a s-b id de sig n is ine ffic ie nt!
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 4
Re se rve s“, Jo urnal o f Re gulato ry E
c o no mic s, 22(2), 2002
.M. Ausub e l, P.R. Milg ro m, „T he lo ve ly b ut lo ne ly Vic kre y a uc tio n“, in:
Co mbinato rialAuc tio ns, MI
T Pre ss, 2006
. K a hn, P. Cra mto n, R.H. Po rte r, R.D. T a b o rs, „Unifo rm Pric ing o r pa y-a s- b id pric ing : A dile mma fo r Ca lifo rnia a nd b e yo nd“, T
he E le c tric ity Jo urnal,
14(6), 2001
e le c tric ity ma rke t? “,
E uro pe an Co mpe titive L aw Re vie w, 21(5), 2000
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 5
ve ry winning b idde r re c e ive s his o wn b id
– L
SOs
– Ma rke t po we r (no syste m pric e )
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 6
SO wa nts to pro c ure 5 MW, 3 b idde rs, 3 b ids e a c h
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 7
SO wa nts to pro c ure 5 MW, 3 b idde rs, 3 b ids e a c h
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 8
SO wa nts to pro c ure 5 MW, 3 b idde rs, 3 b ids e a c h
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 9
SO wa nts to pro c ure 5 MW, 3 b idde rs, 3 b ids e a c h
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 10
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 11
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 12
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 13
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 14
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 15
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 16
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 17
Co nc lusio n
ne ffic ie nt a llo c a tio n
a rg e b idde rs ha ve e c o no mie s o f sc a le (stra te g izing , po rtfo lio o ptimiza tio n)
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 18
ve ry winning b idde r re c e ive s the ma rg ina l b id
ruthful re po rting fo r first ite m, sha ding fo r sub se q ue nt ite ms
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 19
ve ry winning b idde r re c e ive s the ma rg ina l b id
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 20
ve ry winning b idde r re c e ive s the ma rg ina l b id
ruthful re po rting fo r first ite m, sha ding fo r sub se q ue nt ite ms
a rg e supplie rs c a n ma nipula te syste m pric e , b ut sma ll b idde rs b e ne fit, to o .
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 21
Co nc lusio n
ffic ie nc y: Ne ithe r e ffic ie nt, ra nking a mb ig uo us (Ausub e l/ Cra mto n 2002)
a hn/ Cra mto n/ Po rte r/ T a b o rs 2001)
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 22
ve ry winning b id is pa id the b id it ha s b e a te n
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 23
ve ry winning b id is pa id the b id it ha s b e a te n
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 24
– Re ve nue is no t a ffe c te d b y o wn b ids
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 25
– E
ve ry b idde r is a wa rde d the a mo unt sa ve d b y his pa rtic ipa tio n
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 26
– Just c ha ng e pa yme nt rule fro m PAB to Vic kre y
– Hig h re ve nue to b ig supplie rs (pivo ta l supplie rs? ) Wo uld b e a
pro b le m in c urre nt de sig n, to o
– Critic a l a ssumptio ns (n.p. in re se rve pro c ure me nt a uc tio n) – Auc tio n the o ry ra the r ne w sub je c t (Milto n F
rie dma n wro ng ly infe rre d tha t multi-unit, unifo rm-pric e a uc tio ns we re e ffic ie nt)
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 27
I
ne ffic ie nt a llo c a tio n
Re so urc e s wa ste d due to stra te g izing Ma rke t po we r issue s
E
ffic ie nt a llo c a tio n
No c o st fo r stra te g izing F
a ir distrib utio n, b ut po ssib ly (no t c e rta inly) hig he r pro c ure me nt c o sts
Introduction Literature Vickrey Conclusion
Pay‐as‐bid VS Uniform
K a i F linke rb usc h 28
Co nta c t: K a i F linke rb usc h L e hrstuhl für Vo lkswirtsc ha ftsthe o rie We stfä lisc he Wilhe lms-Unive rsitä t, Münste r K a i.F linke rb usc h@ wiwi.uni-mue nste r.de