Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82673
Authors: 
Holmberg, Pär
Year of Publication: 
2005
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 2005:12
Abstract: 
Producers submit committed supply functions to a procurement auction, e.g. an electricity auction, before the uncertain demand has been realized. In the Supply Function Equilibrium(SFE), every firm chooses the bid maximizing his expected profit given the bids of the competitors. In case of asymmetric producers with general cost functions, previous work has shown that it is very difficult to find valid SFE. This paper presents a new numerical procedure that can solve the problem. It comprises numerical integration and an optimization algorithm that searches an end-condition. The procedure is illustrated by an example with three asymmetric firms.
Subjects: 
Supply function equilibrium
uniform-price auction
numerical integration
oligopoly
asymmetry
capacity constraint
wholesale electricity market
JEL: 
C61
D43
D44
L11
L13
L94
Document Type: 
Working Paper

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