The auction model with lower risk in duopolistic electricity market

Abstract

The present paper models the electricity market auction as a two-person game with incomplete information under the assumption that bidders are symmetric, risk neutral and have independent private costs. Alonso and Tejada (2010) define an extensive parametric family of auction models which contains the classic auction models; Uniform, Discriminatory and Vickrey auction models. The present paper analyzes this parametric family of auction models from the viewpoint of the risk. It develops a new auction model called DV, which has lower risk than any other classic auction model.