An experimental investigation of soft price caps in uniform price auction markets for wholesale electricity

Springer Science and Business Media LLC - Tập 36 - Trang 44-59 - 2009
Christian A. Vossler1, Timothy D. Mount2, Robert J. Thomas3, Ray D. Zimmerman3
1Department of Economics and Institute for a Secure and Sustainable Environment, 527C Stokely Management Center, University of Tennessee, Knoxville, USA
2Department of Applied Economics and Management, Cornell University, Ithaca, USA
3School of Electrical and Computer Engineering Cornell University Ithaca, USA

Tóm tắt

This paper presents the results from an auction experiment using industry professionals and student participants who compete in a simulated wholesale market for electricity. Motivated by the intervention by FERC in response to the “meltdown” of the California spot market, we investigate the effect of including a “soft” price cap in a uniform price auction as a means of mitigating high prices. When prices are driven above the soft cap, offer curves become flat, in contrast to the hockey stick shape observed in a typical uniform price auction for electricity. This flat offer curve leads to market prices that are relatively insensitive to both generation costs and demand reductions.

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