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Pro-competitive rationing in multi-unit auctions

Author

Listed:
  • Pär Holmberg

    (Research Institute of Industrial Economics (IFN), Stockholm Electricity Policy Research Group (EPRG), University of Cambridge)

Abstract

In multi-unit auctions, such as auctions of commodities and securities, and financial exchanges, it is necessary to specify rationing rules to break ties between multiple marginal bids. The standard approach in the literature and in practice is to ration marginal bids proportionally. This paper shows how bidding can be made more competitive if the rationing rule instead gives increasing priority to bidders with a small volume of marginal bids at clearing prices closer to the reservation price. In comparison to standard rationing, such a rule can have almost the same effect on the competitiveness of bids as a doubling of the number of bidders.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Pär Holmberg, 2014. "Pro-competitive rationing in multi-unit auctions," Working Papers EPRG 1414, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1414
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    File URL: https://www.jbs.cam.ac.uk/wp-content/uploads/2024/04/eprg-wp1414.pdf
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    Cited by:

    1. Aliabadi, Danial Esmaeili & Kaya, Murat & Şahin, Güvenç, 2017. "An agent-based simulation of power generation company behavior in electricity markets under different market-clearing mechanisms," Energy Policy, Elsevier, vol. 100(C), pages 191-205.

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    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing

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