Prediction Markets to Forecast Electricity Demand
AbstractForecasting 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.
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Bibliographic InfoPaper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number 09ccpre.
Length: 20 pages
Date of creation: 2012
Date of revision: 2012
Publication status: Published in Working Paper, University of Maryland, August 2009
Contact details of provider:
Postal: Economics Department, University of Maryland, College Park, MD 20742-7211
Phone: (202) 318-0520
Fax: (202) 318-0520
Web page: http://www.cramton.umd.edu
electricity market design; prediction markets;
Other versions of this item:
- Peter Cramton & Luciano I. de Castro, 2009. "Prediction Markets to Forecast Electricity Demand," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1527, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-13 (All new papers)
- NEP-ENE-2012-10-13 (Energy Economics)
- NEP-FOR-2012-10-13 (Forecasting)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Berg, Joyce E. & Nelson, Forrest D. & Rietz, Thomas A., 2008. "Prediction market accuracy in the long run," International Journal of Forecasting, Elsevier, Elsevier, vol. 24(2), pages 285-300.
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