OPERATIONAL RESEARCH SOCIETY OF NEW ZEALAND

Professor Rothkopf is an Operational Research Society of New Zealand Visiting Lecturer for 1999, and a plenary speaker at the 34th annual conference of ORSNZ to be held at Waikato University on December 10-11. Light refreshments courtesy of the Operational Research Society of New Zealand will be served in the 12th floor common room of the School of Engineering following the seminar.  All welcome.
 

Abstract

Deregulation of electricity generation in the US is leading to regional daily auctions for electricity supply. This talk will discuss some of the kinds of auctions that are being tried or proposed and some of the issues that arise.  A major part of the talk will be an evaluation of a truth revealing auction for supply and demand bidding with nonconcave benefits. (This is joint work with Benjamin F. Hobbs of The Johns Hopkins University and Richard P. O’Neill and Laurel C. Hyde of the US Federal Energy Regulatory Commission.)  The auction is an implementation of the Vickrey-Clarke-Groves mechanism.  In theory, it achieves efficient resource allocation if firms maximize profits.  However, the auction has several undesirable properties.  It is revenue deficient, can be gamed by cooperation between a supplier and a consumer, and is subject to the same kinds of information revelation and bid-taker cheating concerns that make single item Vickrey auctions rare.