A proposed auction design for incentive auctions is given. The two-sided auctions enable the exchange of spectrum from a low-value use, such as over-the-air TV broadcast, to a high-value use, such as mobile broadband. The approach is both simple and effective. The auction has three stages...

We describe a new approach for selling rough diamonds through competitive auctions. The classical approach of De Beers—giving each customer a bag of stones and a take-it-or-leave-it price—worked well in near monopoly circumstances, but is ill-suited for competitive producers. Competitive...

We analyze the implications of different pricing rules in discrete clock auctions. The two most common pricing rules are highest-rejected bid (HRB) and lowest-accepted bid (LAB). Under HRB, the winners pay the lowest price that clears the market; under LAB, the winners pay the highest price that...

Forward markets, both medium term and long term, complement the spot market for wholesale electricity. The forward markets reduce risk, mitigate market power, and coordinate new investment. In the medium term, a forward energy market lets suppliers and demanders lock in energy prices and...

Profit-maximizing bidding in uniform price auction markets involves bidding above marginal cost. It therefore is not surprising that such behavior is observed in electricity markets. This incentive to bid above marginal cost is not the result of coordinated action among the bidders. Rather, each...

This paper examines principles of market design as applied to electricity markets. I illustrate the principles with examples of both good and bad designs. I discuss one of the main design challenges—dealing with market power. I then discuss FERC’s choice of a standard market design.

In light of my report "Competitive Bidding Behavior in Uniform Price Auction Markets" ("Competitive Bidding Behavior Report"), which is being separately filed in this proceeding, I have reviewed the testimony of Drs. Fox-Penner, Stern, Berry, and Reynolds on behalf of the California parties, and...

The simultaneous ascending auction has proved to be a successful method of auctioning many related items. Simultaneous sale and ascending bids enable price discovery, which helps bidders build desirable packages of items. Although package bids are not allowed, the auction format does handle mild...

I study the design of oil rights auctions. A good auction design promotes both an efficient assignment of rights and competitive revenues for the seller. The structure of bidder preferences and the degree of competition are key factors in determining the best design. With weak competition and...

Profit-maximizing bidding in uniform price auction markets involves bidding above marginal cost. It therefore is not surprising that such behavior is observed in electricity markets. Common bidding behavior such as "hockey stick" bids easily are explained by suppliers determining their supply...