4/8/2014
1
•
Today:
–
Brief discussion of auction design.
–
Market based emissions regulation: Design and
implementation.
•
Readings for today: Goulder papers (required);
Phaneuf chapter (optional). See syllabus for
complete reference.
•
Thursday: Stakeholder meeting!!
•
Round 2 bids due tonight: Uniform price
auction!!
Round 1 : Pay
‐
as
‐
bid auction
4/8/2014
2
HOUR 1
Wednesday
Friday
Demand : 11,013 MW
Marginal Price : $41.50
Demand : 11,013 MW
Marginal Price : $39.47
0
20
40
60
80
PRICE1
0
5000
10000
15000
20000
cummw
0
20
40
60
80
100
PRICE1
0
5000
10000
15000
20000
cummw
Why are some firms bidding in at $0 when this is a pay‐as‐bid auction??Is this a good strategy?
4/8/2014
3
HOUR 3
Wednesday
Friday
Demand : 20,141 MW
Marginal Price : $58
Demand : 20,141 MW
Marginal Price : $447 (!!)
40
50
60
70
80
PRICE3
0
5000
10000
15000
20000
cummw
0
100
200
300
400
500
PRICE3
0
5000
10000
15000
20000
cummw
Why is the price so different across Wednesday/Friday?
HOUR 4
Wednesday
Friday
Demand : 17,059 MW
Marginal Price : $55.94
Demand : 17,059 MW
Marginal Price : $47
0
20
40
60
80
PRICE4
0
5000
10000
15000
20000
cummw
0
50
100
PRICE4
0
5000
10000
15000
20000
cummw
4/8/2014
4
Quiz # 1
How (if at all) did your bidding strategy changebetween the uniform price auction (practiceround 0) and the pay as bid auction design(round 1)?Briefly explain the rationale for this change.
4/8/2014
5
Multi
‐
unit auctions finance
government debt
•
To finance the public debt, the U.S. Treasury sells
bonds, Treasury Inflation
‐
Protected Securities
(TIPS), etc. to institutional and individual
investors through public auctions.
•
Treasury auctions occur regularly.
•
Treasury accepts competitive bids in ascending
order of their rate, yield, or discount margin
(lowest to highest) until the quantity of awarded
bids reaches the offering amount.
Multi
‐
unit auctions – Treasury bills
•In both uniform and discriminatory auctions,bidders submit bid curves which specify howmany bonds they would purchase at a givenprice.
