An Introduction to Electricity Market Auctions Using a Spreadsheet

John Farr - jfarr@rcn.com
Farr Consulting, School of Business, 5 Tavern Lane, Lexington, Massachusetts 02421

Frank A. Felder - frank.felder@manhattan.edu
Farr Consulting, School of Business, Manhattan College, Riverdale, New York, 10471

Abstract

This paper presents a spreadsheet model of an electricity market that can be used to simulate two types of auctions, a single price auction and a paid your bid auction. This model can be used in a variety of pedagogical applications. From the perspective of management science and operations research (MS/OR), this application emphasizes model use and integrates several important concepts. From a business perspective, users can explore various bidding strategies and their implications, depending on the auction rules. From a public policy perspective, students can learn how market design decisions may influence market outcomes and the exercise of market power.

Download the PDF
10.1287/ited.4.1.11

Citation Information
Farr, J. Felder, F. A. 2003. An Introduction to Electricity Market Auctions Using a Spreadsheet. INFORMS Trans. Ed. 4(1) 11-22. Available online at http://ite.pubs.informs.org/.

DOI: 10.1287/ited.4.1.11