A Comparison of Pay-As-Bid and Market-Clearing Price Bidding Processes in Electric Utility Auctions
Article first published online: 10 MAY 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Managerial and Decision Economics
Volume 35, Issue 4, pages 258–263, June 2014
How to Cite
Berry, K. (2014), A Comparison of Pay-As-Bid and Market-Clearing Price Bidding Processes in Electric Utility Auctions. Manage. Decis. Econ., 35: 258–263. doi: 10.1002/mde.2612
- Issue published online: 8 MAY 2014
- Article first published online: 10 MAY 2013
- Manuscript Accepted: 12 MAR 2013
- Manuscript Revised: 25 MAR 2012
- Manuscript Received: 26 MAY 2010
As the electric utility industry moves to Regional Transmission Organizations, there are more opportunities for merchant plants in selling wholesale energy to electric utilities. Two alternative bidding regimes are considered: (i) pay-as-bid and (ii) pay with market-clearing bid. With stochastic price-sensitive demand, we show that pay-as-bid has greater average price, but lower price variance than does market-clearing price. Copyright © 2013 John Wiley & Sons, Ltd.