An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition exist and are described in the section about different types. The branch of economic theory dealing with auction types and participants' behavior in auctions is called auction theory.
In a broad sense, an electricity market is a system that facilitates the exchange of electricity-related goods and services.
Paul Robert Milgrom is an American economist. He is the Shirley and Leonard Ely Professor of Humanities and Sciences at the Stanford University School of Humanities and Sciences, a position he has held since 1987. He is a professor in the Stanford School of Engineering as well and a Senior Fellow at the Stanford Institute for Economic Research. Milgrom is an expert in game theory, specifically auction theory and pricing strategies. He is the winner of the 2020 Nobel Memorial Prize in Economic Sciences, together with Robert B. Wilson, "for improvements to auction theory and inventions of new auction formats".
A spectrum auction is a process whereby a government uses an auction system to sell the rights to transmit signals over specific bands of the electromagnetic spectrum and to assign scarce spectrum resources. Depending on the specific auction format used, a spectrum auction can last from a single day to several months from the opening bid to the final winning bid. With a well-designed auction, resources are allocated efficiently to the parties that value them the most, the government securing revenue in the process. Spectrum auctions are a step toward market-based spectrum management and privatization of public airwaves, and are a way for governments to allocate scarce resources.
Auction theory is an applied branch of economics which deals with how bidders act in auction markets and researches how the features of auction markets incentivise predictable outcomes. Auction theory is a tool used to inform the design of real-world auctions. Sellers use auction theory to raise higher revenues while allowing buyers to procure at a lower cost. The conference of the price between the buyer and seller is an economic equilibrium. Auction theorists design rules for auctions to address issues which can lead to market failure. The design of these rulesets encourages optimal bidding strategies among a variety of informational settings. The 2020 Nobel Prize for Economics was awarded to Paul R. Milgrom and Robert B. Wilson “for improvements to auction theory and inventions of new auction formats.”
A multiunit auction is an auction in which several homogeneous items are sold. The units can be sold each at the same price or at different prices.
Market microstructure is a branch of finance concerned with the details of how exchange occurs in markets. While the theory of market microstructure applies to the exchange of real or financial assets, more evidence is available on the microstructure of financial markets due to the availability of transactions data from them. The major thrust of market microstructure research examines the ways in which the working processes of a market affect determinants of transaction costs, prices, quotes, volume, and trading behavior. In the twenty-first century, innovations have allowed an expansion into the study of the impact of market microstructure on the incidence of market abuse, such as insider trading, market manipulation and broker-client conflict.
Tacit collusion is a collusion between competitors who do not explicitly exchange information but achieve an agreement about coordination of conduct. There are two types of tacit collusion: concerted action and conscious parallelism. In a concerted action also known as concerted activity, competitors exchange some information without reaching any explicit agreement, while conscious parallelism implies no communication. In both types of tacit collusion, competitors agree to play a certain strategy without explicitly saying so. It is also referred to as oligopolistic price coordination or tacit parallelism.
A combinatorial auction is a type of smart market in which participants can place bids on combinations of discrete heterogeneous items, or “packages”, rather than individual items or continuous quantities. These packages can be also called lots and the whole auction a multi-lot auction. Combinatorial auctions are applicable when bidders have non-additive valuations on bundles of items, that is, they value combinations of items more or less than the sum of the valuations of individual elements of the combination.
The United States 700 MHz FCC wireless spectrum auction, officially known as Auction 73, was started by the Federal Communications Commission (FCC) on January 24, 2008 for the rights to operate the 700 MHz radio frequency band in the United States. The details of process were the subject of debate among several telecommunications companies, including Verizon Wireless, AT&T Mobility, as well as the Internet company Google. Much of the debate swirled around the open access requirements set down by the Second Report and Order released by the FCC determining the process and rules for the auction. All bidding was required by law to commence by January 28.
Robert Butler "Bob" Wilson, Jr. is an American economist and the Adams Distinguished Professor of Management, Emeritus at Stanford University. He was jointly awarded the 2020 Nobel Memorial Prize in Economic Sciences, together with his Stanford colleague and former student Paul R. Milgrom, "for improvements to auction theory and inventions of new auction formats". Two more of his students, Alvin E. Roth and Bengt Holmström, are also Nobel Laureates in their own right.
Paul David Klemperer FBA is an economist and the Edgeworth Professor of Economics at the Department of Economics, Oxford University. He is a member of the Klemperer family. He works on industrial economics, competition policy, auction theory, and climate change economics and policy.
Alvin Eliot Roth is an American academic. He is the Craig and Susan McCaw professor of economics at Stanford University and the Gund professor of economics and business administration emeritus at Harvard University. He was President of the American Economic Association in 2017.
A smart market is a periodic auction which is cleared by the operations research technique of mathematical optimization, such as linear programming. The smart market is operated by a market manager. Trades are not bilateral, between pairs of people, but rather to or from a pool. A smart market can assist market operation when trades would otherwise have significant transaction costs or externalities.
Market design is a practical methodology for creation of markets of certain properties, which is partially based on mechanism design. In some markets, prices may be used to induce the desired outcomes — these markets are the study of auction theory. In other markets, prices may not be used — these markets are the study of matching theory.
The Price of Anarchy (PoA) is a concept in game theory and mechanism design that measures how the social welfare of a system degrades due to selfish behavior of its agents. It has been studied extensively in various contexts, particularly in auctions.
Estelle Cantillon is a Belgian economist. She is currently FNRS Research Director at the Université Libre de Bruxelles, a position she has held since 2016. Cantillon is also an associated researcher at the Toulouse School of Economics. Cantillon currently serves as the Joint Managing Editor at the Economic Journal and is an associate editor at the RAND Journal of Economics. She also holds appointments as a member of WZB Berlin's Advisory Board, research fellow at the Centre for Economic Policy Research, and committee member of Rethinking Belgium, “Matching in Practice” research network, and the European Economic Association. She has previously taught at Harvard Business School, Harvard Kennedy School, and Yale University. Cantillon's professional interests are microeconomics, market design, industrial organization and environmental economics. Her research typically combines theory and data. Currently, her research focuses on carbon emissions markets, the design of electricity wholesale markets, and climate transition policies. She is fluent in French and English and has passive knowledge of Dutch, German, and Spanish.
A multi-attribute auction is a type of auction in which the bids have multiple parts. Multi-attribute auctions allow agents to sell and purchase goods and services, taking into account more attributes than just price.
Course allocation is the problem of allocating seats in university courses among students. Many universities impose an upper bound on the number of students allowed to register to each course, in order to ensure that the teachers can give sufficient attention to each individual student. Since the demand for some courses is higher than the upper bound, a natural question is which students should be allowed to register to each course.
A load pocket is an area of electric grid that has limited ability to import electricity due to either very high concentration of demand or insufficient transmission capabilities and therefore cannot be entirely provided with power without participation of local electricity generation providers. A typical load pocket includes a major city. Load pocket's existence usually indicates difficulties with building of either new generation or new transmission, or both due to the area constraints or political pressure and despite the pocket being an attractive place for investment. The load pockets represent a problem for the deregulated electricity markets, as in the absence of regulation the captive customers are forced to accept the prices set by the local providers.
