Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/59622
Authors: 
De Castro, Luciano I.
Cramton, Peter
Year of Publication: 
2009
Series/Report no.: 
Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1527
Abstract: 
Forecasting electricity demand for future years is an essential step in resource planning. A common approach is for the system operator to predict future demand from the estimates of individual distribution companies. However, the predictions thus obtained may be of poor quality, since the reporting incentives are unclear. We propose a prediction market as a form of forecasting future demand for electricity. We describe how to implement a simple prediction market for continuous variables, using only contracts based on binary variables. We also discuss specific issues concerning the implementation of such a market.
Subjects: 
forecast of electricity demand
power generation planning
implementation of prediction markets
forecast of future demand
mechanism design of capacity markets
prediction market for continuous variables
winner-takes-all contract
index contract
Document Type: 
Working Paper

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