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dc.contributor.authorSCHWENEN, Sebastian
dc.date.accessioned2012-11-22T17:26:51Z
dc.date.available2012-11-22T17:26:51Z
dc.date.issued2012
dc.identifier.issn1028-3625
dc.identifier.urihttp://hdl.handle.net/1814/24537
dc.description.abstractThis paper employs a simple model to describe bidding behavior in multi-unit uniform price procurement auctions when firms are capacity constrained. Using data from the New York City capacity auctions, I find that capacity constrained firms use simple bidding strategies to co-ordinate on an equilibrium that extracts high rents for all bidders. I show theoretically and empirically that the largest bidder submits the auction clearing bid. All other bidders submit infra-marginal bids that are low enough to not be profitably undercut. Infra-marginal bidders react to capacity endowments and decrease their bids as the largest firm’s capacities and its profits of undercutting increase. Capacity markets, when designed as studied here, are a costly tool to increase security of supply in electricity markets, as capacity prices do not reflect actual capacity scarcity.en
dc.format.mimetypeapplication/pdf
dc.language.isoenen
dc.relation.ispartofseriesEUI RSCASen
dc.relation.ispartofseries2012/62en
dc.relation.ispartofseriesLoyola de Palacio Programme on Energy Policyen
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectAuctionsen
dc.subjectElectricityen
dc.subjectMarket Designen
dc.titleStrategic Bidding in Multi-unit Auctions with Capacity Constrained Bidders: The New York capacity marketen
dc.typeWorking Paperen
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