Modifying the uniform-price auction to eliminate ‘collusive-seeming equilibria’
Abstract
The uniform-price auction is used in many regional electricity procurement auctions
and its “collusive-seeming equilibria” have been linked to potential exercise of market
power. Such equilibria do not exist, however, if a small amount of cash is split among
rationed bidders. To shed light on what drives this result, I also examine variations
in which the auctioneer is able to increase and/or decrease quantity after receiving
the bids. “Increasable demand” also eliminates all collusive-seeming equilibria. These
results suggest ways to modify the uniform-price auction in order to reduce the potential
exercise of market power.
Type
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https://hdl.handle.net/10161/2655Collections
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David McAdams
Professor of Business Administration
David McAdams is Professor of Business Administration at the Fuqua School of Business,
Duke University. He is also Professor of Economics in the Economics Department at
Duke. He earned a B.S. in Applied Mathematics at Harvard University, an M.S. in Statistics
from Stanford University, and a Ph.D. in Business from the Stanford Graduate School
of Business. Before joining the faculty at Duke, he was Associate Professor of Applied
Economics at the MIT Sloan School of Management. He has also worked a
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