Asymmetric demand information in uniform and discriminatory call auctions: an experimental analysis motivated by electricity markets

Klaus Abbink, Jordi Brandts and Tanga McDaniel

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We study the outcomes of experimental multi-unit uniform and discriminatory auctions with demand uncertainty. Our study is motivated by the ongoing debate about market design in the electricity industry. Our main aim is to compare the effect of asymmetric demand-information between sellers on the performance of the two auction institutions. In our baseline conditions all sellers have the same information, whereas in our treatment conditions some sellers have better information than others. In both information conditions we find that average transaction prices and price volatility are not significantly different under the two auction institutions. However, when there is asymmetric information among sellers the discriminatory auction is significantly less efficient. These results are not in line with the typical arguments made in favor of discriminatory pricing in electricity industries; namely, lower consumer prices and less price volatility. Moreover, our results provide some indication that discriminatory auctions reduce technical efficiency relative to uniform auctions.

Keywords: Experiments; asymmetric information; discriminatory price auctions; uniform price auctions; electricity industries (search for similar items in EconPapers)
JEL-codes: C90 D42 D82 K23 L94 Q41 (search for similar items in EconPapers)
Pages: 25
Date: 2002-02-01
New Economics Papers: this item is included in nep-ene, nep-exp and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Asymmetric Demand Information in Uniform and Discriminatory Call Auctions: An Experimental Analysis Motivated by Electricity Markets (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:520.02

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