Abstract not found

We examine the bidding behavior of firms competing in the newly created spot market for electricity in Texas, where electricity generating firms submit hourly supply schedules to sell power. We characterize an equilibrium model of bidding into this market and use detailed firm-level data on bids and marginal costs of production to compare actual bidding behavior to theoretical benchmarks derived from our model. We find that firms with large stakes in the market performed close to the theoretical benchmark of static profit-maximization. However, several smaller firms utilized excessively steep bid schedules that significantly deviated from this benchmark. Our results suggest that payoff scale has an important effect on firms ’ willingness and ability to participate in complex, strategic market environments. We find that the bidding behavior of the smaller firms contributed significantly to productive inefficiency in this new market, although the smaller firms moved closer to the theoretical bidding benchmarks over time.

The intemet facilitates interactive and asynchronous communication among human and artificial agents in large bilateral markets. As a consequence, new institutional structures are emerging in the new economy. I discuss a few core problems associated with the economic design of internet markets and the way they are approached by eBay. com, a popular online auction platform.

Cognitive Dissonance has interested consumer researchers for many years. Until recently, however, there has not been an accepted consumer dissonance scale. Using a recently developed scale, the present study examined the presence of dissonance segments in two customer samples, in which a significant minority of respondents experienced dissonance. Similar segments were found in both clusters, suggesting they may be common across a number of purchase contexts. Further investigation found some background differences, although a number of suggested relationships (e.g. price would affect dissonance) were not supported. Given the potential negative effects of dissonance, managers need to give this construct their attention.

ments will not need to issue any new public debt this year. This will have a strong impact on public debt markets. Interest rates may remain low even if inflationary expectations increase (or strong growth puts pressure on real interest rates) because many investors buy regularly government bonds, either out of habit or because required so by supervisors or the markets. The ECB might thus be induced to a more accommodating policy stance. In this note we will briefly analyse the macroeconomic importance of the UMTS windfall and then briefly comment on the test for the integration of national debt markets provided by the different national approaches. We would also emphasise that the UMTS windfall illustrates a wider issue that will remain important as governments are aiming at surpluses one or two years in the future. 1. The macroeconomic impact The sums raised so far are certainly non-negligible even at the euro area level (not to speak about the national one). Table 1 below shows s

Understanding strategic bidding in

This paper reviews the applications of auction theory to corporate finance. It starts with a review of the main auction theory frameworks and the major results. It then goes on to discuss how auction theory can be applied, in the context of the market for corporate control, not only to “inform” a company’s board or regulators, but also to understand some of the observed empirical evidence on target and bidder returns. It then considers the role of preemptive bidding, stock versus cash offers, the effect of toeholds on bidding behavior, the effect of bidder heterogeneity and discrimination in auctions, merger waves, bankruptcy auctions, share repurchases and “Dutch” auctions, IPO auctions, and the role of debt in auctions. It concludes with a

Carbon allowance auctions are a component of existing and proposed regional cap-and-trade programs in the U.S. and are also included in recent bills in the U.S. Congress that would establish a national cap-and-trade program in the U.S. to regulate greenhouse gases (“carbon”). We discuss and evaluate the two leading candidates for the auction format for carbon allowance auctions: a uniform-price sealed-bid auction and an ascending-bid dynamic auction, either of which could be augmented with a “price collar ” to ensure that the price of allowances is neither too high nor too low. We identify the primary trade-offs between these auction formats as applied to carbon allowance auctions and suggest auction design choices that address potential concerns about efficiency losses from collusion and other factors. We conclude that a uniform-price sealed-bid auction is more appropriate for the sale of carbon allowances than the other leading choices, in part because it offers increased robustness to collusion without significant sacrifice in terms of price discovery. 1

We prove existence of mixed strategy equilibria for a class of discontinuous two-player games with non-compact strategy sets. As a corollary of our main results, we obtain a continuum of mixed strategy equilibria for the first- and second-price two-bidder auctions with toeholds. We also find Klemperer’s (2000) result about the existence of mixed strategy equilibria in the classical Bertrand duopoly.

We wish to thank Matthew O. Jackson for useful comments. The authors ’ work is partially supported by the Institut Valencià d’Investigacions Econòmiques. Alcalde acknowledges support by FEDER and the Spanish Ministerio de Educación y Ciencia under project SEJ2007-62656/ECON. Dahm acknowledges …nancial support by the Departament d’Universitats, Recerca i Societat de la Informació (Generalitat de Catalunya) under project 2005SGR00949 and by the Spanish Ministerio de Educación y Ciencia under project SEJ2005-04085/ECON. y IUDESP and Dep. of Economics, University of Alicante. z