Price Regulations in a Multi-unit Uniform Price Auction

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Abstract

Inspired by recent regulations in the New York ICAP market we examine the effect of different price regulations on a multi-unit uniform price auction. We investigate a bid cap and a bid foor. Given suffciently high total capacities general bid caps always ensure that the market price does not exceed the price cap whereas a selective bid cap for only the larger firms, does not guarantee this outcome. A sufficiently high bid floor always destroys pure strategy equilibria with equilibrium prices above the marginal costs, no matter whether the floor applies to all or only to relatively small firms.

Conference

ConferenceBerlin Conference on Energy and Electricity Economics 2015
LocationDIW Berlin, Schumpeter Hall
CountryGermany
CityBerlin
Period28/05/201529/05/2015
Internet address

Bibliographical note

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Keywords

  • Electricity
  • Capacity markets
  • Price regulation

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