Market Power and Efficiency in a Computational Electricity Market with Discriminatory Double-Auction Pricing
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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| Length: | 25 pages |
| Date of creation: | 11 Nov 2000 |
| Handle: | RePEc:wpa:wuwpco:0004005 |
| Note: | Type of Document - pdf file; prepared on IBM PC -MSWord; to print on HP/PostScript/; pages: 25 ; figures: included |
| Contact details of provider: | Web page: http://econwpa.repec.org
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References listed on IDEAS
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.:
- Paul Klemperer, 2002.
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- Leigh Tesfatsion, 2000. "Structure, Behavior, and Market Power in an Evolutionary Labor Market with Adaptive Search," Computational Economics 0004002, EconWPA.
- Tesfatsion, Leigh S., 2009. "Structure, Behavior, and Market Power in an Evolutionary Labor Market with Adaptive Search," Staff General Research Papers Archive 1681, Iowa State University, Department of Economics.
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- Vriend, Nicolaas J., 2000. "An illustration of the essential difference between individual and social learning, and its consequences for computational analyses," Journal of Economic Dynamics and Control, Elsevier, vol. 24(1), pages 1-19, January. Full references (including those not matched with items on IDEAS)
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