Market Power and Efficiency in a Computational Electricity Market With Discriminatory Double-Auction Pricing

Date
2001-04-28
Authors
Nicolaisen, James
Petrov, Valentin
Tesfatsion, Leigh
Tesfatsion, Leigh
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Economics
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This study reports experimental market power and efficiency outcomes for a computational wholesale electricity market operating In the short run under systematically varied concentration and capacity conditions. The pricing of electricity is determined by means of a clearinghouse double auction with discriminator}- midpoint pricing. Buyers and sellers use a modified Roth-Erev individual reinforcement learning algorithm to determine their price and quantity offers in each auction round. It is shown that high market efficiency is generally attained, and that market microstructure is strongly predictive for the relative market power of buyers and sellers independently of the values set for the reinforcement learning parameters. Results are briefly compared against results from an eariier study in which buyers and sellers instead eng

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