Tacit collusion and capacity withholding in repeated uniform price auctions
This article analyzes tacit collusion in infinitely repeated multiunit uniform price auctions in a symmetric oligopolywith capacity-constrained firms.Under two popular definitions of the uniform price, when each firm sets a price-quantity pair, perfect collusion with equal sharing of profit is easier to sustain in the uniform price auction than in the corresponding discriminatory auction. Moreover, capacity withholding may be necessary to sustain this outcome. Even when firms may set bids that are arbitrary finite step functions of price-quantity pairs, in repeated uniform price auctions maximal collusion is attained with simple price-quantity strategies exhibiting capacity withholding.
|Date of creation:||2007|
|Date of revision:|
|Publication status:||Published in Rand Journal of Economics 4.38(2007): pp. 1044-1069|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Berenstein, Severin & Bushnell, James & Stoft, Steven, 2000.
"The Competitive Effects of Transmission Capacity in a Deregulated Electricity Industry,"
Staff General Research Papers
13145, Iowa State University, Department of Economics.
- Severin Borenstein & James. Bushnell & Steven Stoft, 2000. "The Competitive Effects of Transmission Capacity in A Deregulated Electricity Industry," RAND Journal of Economics, The RAND Corporation, vol. 31(2), pages 294-325, Summer.
- Severin Borenstein & James Bushnell & Steven Stoft, 1997. "The Competitive Effects of Transmission Capacity in a Deregulated Electricity Industry," NBER Working Papers 6293, National Bureau of Economic Research, Inc.
- Davidson, Carl & Deneckere, Raymond, 1984. "Horizontal mergers and collusive behavior," International Journal of Industrial Organization, Elsevier, vol. 2(2), pages 117-132, June.
- Bushnell, James & Wolfram, Catherine, 2008. "Electricity Markets," Staff General Research Papers 31547, Iowa State University, Department of Economics.
- Crawford, Gregory S. & Crespo, Joseph & Tauchen, Helen, 2007. "Bidding asymmetries in multi-unit auctions: Implications of bid function equilibria in the British spot market for electricity," International Journal of Industrial Organization, Elsevier, vol. 25(6), pages 1233-1268, December.
- Green, Richard J & Newbery, David M, 1992.
"Competition in the British Electricity Spot Market,"
Journal of Political Economy,
University of Chicago Press, vol. 100(5), pages 929-53, October.
- Green, Richard & Newbery, David M G, 1991. "Competition in the British Electricity Spot Market," CEPR Discussion Papers 557, C.E.P.R. Discussion Papers.
- Aitor Ciarreta & María Espinosa, 2010.
"Market power in the Spanish electricity auction,"
Journal of Regulatory Economics,
Springer, vol. 37(1), pages 42-69, February.
- Espinosa Alejos, María Paz & Ciarreta Antuñano, Aitor, 2005. "Market Power in the Spanish Electricity Auction," DFAEII Working Papers 2005-04, University of the Basque Country - Department of Foundations of Economic Analysis II.
- Aitor Ciarreta & María Paz Espinosa, 2003. "Market Power In The Spanish Wholesale Electricity Market," Working Papers. Serie AD 2003-22, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Emmanuel Dechenaux & Dan Kovenock, 2011.
"Endogenous rationing, price dispersion and collusion in capacity constrained supergames,"
Springer, vol. 47(1), pages 29-74, May.
- Dechenaux, Emmanuel & Kovenock, Dan, 2003. "Endogenous Rationing, Price Dispersion, and Collusion in Capacity Constrained Supergames," Purdue University Economics Working Papers 1164, Purdue University, Department of Economics.
- Natalia Fabra & Nils‐Henrik Fehr & David Harbord, 2006.
"Designing electricity auctions,"
RAND Journal of Economics,
RAND Corporation, vol. 37(1), pages 23-46, 03.
- Borenstein, Severin & Bushnell, James & Wolak, Frank, 2002. "Measuring Market Inefficiencies in California's Deregulated Electricity Industry," Staff General Research Papers 13136, Iowa State University, Department of Economics.
- Lambson, Val Eugene, 1987. "Optimal Penal Codes in Price-Setting Supergames with Capacity Constraints," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 385-97, July.
- Raymond Deneckere & Dan Kovenock, 1988.
773, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Anette Boom, . "Investments in Electricity Generation Capacity under Different Market Structures with Price Responsive Demand," Papers 016, Departmental Working Papers.
- Natalia Fabra, 2003. "Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 271-293, 09.
- Brock, William A & Scheinkman, Jose A, 1985. "Price Setting Supergames with Capacity Constraints," Review of Economic Studies, Wiley Blackwell, vol. 52(3), pages 371-82, July.
- Le Coq, Chloé, 2002. "Strategic use of available capacity in the electricity spot market," SSE/EFI Working Paper Series in Economics and Finance 496, Stockholm School of Economics.
- Garcia-Diaz, Anton & Marin, Pedro L., 2003. "Strategic bidding in electricity pools with short-lived bids: an application to the Spanish market," International Journal of Industrial Organization, Elsevier, vol. 21(2), pages 201-222, February.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:36764. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.