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- Title
Procurement auctions with losses.
- Authors
Heymann, Benjamin; Jofré, Alejandro
- Abstract
We use a fixed point gradient flow algorithm to compute the equilibria of first-price procurement auctions in the presence of losses and Bayesian priors. We use this efficient algorithm to compare optimal, first-price and VCG auctions. This allows us to numerically estimate the social cost of sub-optimality of the nodal pricing mechanism in wholesale electricity markets. We also derive a closed form expression of the optimal mechanism procurement cost when the types are uniformly distributed.
- Subjects
AUCTIONS; ELECTRICITY markets; EXTERNALITIES; COST estimates; WHOLESALE prices
- Publication
Computational Management Science, 2024, Vol 21, Issue 2, p1
- ISSN
1619-697X
- Publication type
Article
- DOI
10.1007/s10287-024-00513-2