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Market Power and Efficiency in a Computational Electricity Market with Discriminatory Double-Auction Pricing Author info | Abstract | Publisher info | Download info | Related research | Statistics James Nicolaisen (Iowa State University)
Valentin Petrov (Iowa State University)
Leigh Tesfatsion (Iowa State University)
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registered author(s):
This study reports experimental market power and efficiency outcomes for a computational wholesale electricity market operating in the short run under systematically varied concentration and capacity conditions. The pricing of electricity is determined by means of a clearinghouse double auction with discriminatory mid-point pricing. Buyers and sellers use Roth-Erev individual reinforcement learning to determine their price and quantity offers in each auction round. It is shown that market microstructure is strongly predictive for the relative market power of buyers and sellers, and that high market efficiency is generally attained. These findings are robust for tested changes in individual learning parameters. It is also shown that similar relative market power findings are obtained if the electricity buyer and seller populations instead each engage in social mimicry learning via a genetic algorithm. However, market efficiency is substantially reduced.
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Paper provided by EconWPA in its series Computational Economics with number
0004005.
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Length: 25 pages
Date of creation: 11 Nov 2000Date of revision:
Handle: RePEc:wpa:wuwpco:0004005Note: Type of Document - pdf file; prepared on IBM PC -MSWord; to print on HP/PostScript/; pages: 25 ; figures: includedContact details of provider: Web page: http://129.3.20.41
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Keywords: Wholesale electricity market ; Electricity restructuring ; Double auction ; Market power ; Efficiency ; Concentration ; Capacity ; Agent-based computational economics ; Roth-Erev reinforcement learning ; Genetic algorithm social learning. ; Other versions of this item:
Paper Nicolaisen, James & Petrov, Valentin & Tesfatsion, Leigh, 2002.
"Market Power and Efficiency in a Computational Electricity Market with Discriminatory Double-Auction Pricing ,"
Staff General Research Papers
2050, Iowa State University, Department of Economics.
[Downloadable!] Nicolaisen, James & Petrov, Valentin & Tesfatsion, Leigh, 2001.
"Market Power and Efficiency in a Computational Electricity Market with Discriminatory Double-Auction Pricing ,"
Staff General Research Papers
1952, Iowa State University, Department of Economics.
[Downloadable!] Find related papers by JEL classification: D4 - Microeconomics - - Market Structure and Pricing D44 - Microeconomics - - Market Structure and Pricing - - - Auctions D8 - Microeconomics - - Information, Knowledge, and Uncertainty L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance L5 - Industrial Organization - - Regulation and Industrial Policy L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities C6 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming C9 - Mathematical and Quantitative Methods - - Design of Experiments
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2005 Annual meeting, July 24-27, Providence, RI
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"Learning Agents in an Artificial Power Exchange: Tacit Collusion, Market Power and Efficiency of Two Double-auction Mechanisms ,"
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