Auction Basics for Wholesale Power Markets: Objectives and Pricing Rules

Leigh Tesfatsion ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Power systems have distinctive features that greatly complicate the development of auction designs. This study reviews the theory and practice of auction design as it relates specifically to U.S. restructured wholesale power markets, i.e., centrally-administered wholesale power markets with congestion managed by locational marginal prices. Basic auction concepts such as reservation value, net seller surplus, net buyer surplus, competitive market clearing, market efficiency, market pricing rules, supply offers, demand bids, strategic capacity withholding, and market power are explained and illustrated. Complicating factors specific to wholesale power markets are clarified, and recent advances in computational tools designed to address these complications are briefly noted.

Keywords: market power; Auction markets; power systems; design; efficency; pricing rules; agent-based test beds (search for similar items in EconPapers)
JEL-codes: C6 D4 D6 L1 L2 L3 L94 Q4 (search for similar items in EconPapers)
Date: 2009-06-30
References: View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www2.econ.iastate.edu/papers/p6461-2009-07-01.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:13074

Access Statistics for this paper

More papers in Staff General Research Papers Archive from Iowa State University, Department of Economics Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070. Contact information at EDIRC.
Bibliographic data for series maintained by Curtis Balmer ().