Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81375
Authors: 
Holmberg, Pär
Newbery, David
Year of Publication: 
2009
Series/Report no.: 
IFN Working Paper 812
Abstract: 
The supply function equilibrium provides a game-theoretic model of strategic bidding in oligopolistic wholesale electricity auctions. This paper presents an intuitive account of current understanding and shows how welfare losses depend on the number of firms in the market and their asymmetry. Previous results and general recommendations for divisible-good/multi-unit auctions provides guidance on the design of the auction format; setting the reservation price; the rationing rule; and restrictions on the offer curves in wholesale electricity auctions.
Subjects: 
Wholesale Electricity Markets
Supply Function Equilibria
Competition Policy
JEL: 
C62
D43
D44
L94
Document Type: 
Working Paper

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