Bidding

About: Bidding is a research topic. Over the lifetime, 15371 publications have been published within this topic receiving 294233 citations. The topic is also known as: competitive bidding.

Renewable energy gathers steam in South Africa

Abstract: South Africa׳s Renewable Energy Independent Power Producers Procurement Programme (the REI4P) is an extensive initiative to install 17.8 GW of electricity generation capacity from renewables – wind, solar, biomass, biogas and hydropower – over the period 2012–2030. Although at the outset the REI4P seemed an expensive option, designed only to deflect criticism of South Africa׳s high carbon footprint and excessive dependence on coal-based electricity generation, the escalating costs of the latter, the rapidly falling costs of photovoltaic and wind power, and the increasingly competitive bidding process of the REI4P have changed this prospect. At the conclusion of round three, the weighted cost of energy has reached a 23% discount to the cost of new coal-based generation and a 28% discount to global renewable energy prices. The bidders׳ commitments to local employment creation have similarly increased from 11 to 18 jobs/MW. The programme is now well placed to deliver on a broad range of objectives, including regional development and black economic empowerment. However, maximum benefit from the REI4P will not be secured without some revision to aspects of the bidding and procurement process. More specifically, the local content provisions need to be tightened to drive higher levels of local manufacturing.

Finding multiperiod Nash equilibria in pool-based electricity markets

Abstract: Pool-based electricity markets can be simulated with various degrees of accuracy. When compared to actual markets, most of the simulators produce outcomes than cannot be extrapolated beyond the specific scenario analyzed. This is most critical for regulators and market participants which need tools to analyze market power and bidding strategies, respectively, for a broad range of scenarios. Both objectives can be tackled if the possible equilibria of a pool-based multiperiod market are determined. This paper presents a three-step methodology to find these equilibria. First, a detailed model of an electricity market is presented, considering multiperiod bidding, price elasticity, and network modeling. Second, an iterative simulation process is run to detect participants' bidding strategies implicit in the optimized production resulting from the simulation. Finally, output data from the simulator are analyzed to obtain Nash equilibria. Iterated deletion is used in the last step to remove strategies that are dominated by others that generate higher profits. A realistic case study illustrates the proposed technique.

General Bidding Model

Abstract: The general model of competitive bidding is not limited by the assumptions on which Friedman's and Gates' models depend. It is applicable to competition for which a contractor's cost distribution and opponents' bid distributions can be estimated. Historical data of contractor's cost and competitors' bids on different projects produce a distribution for the ratio between them, the bid/cost ratio. Standardized distributions for contractors' cost and competitors' bids, estimated to have respective means of one and the mean bid/cost ratio and to have equal variance, are inserted into the general model. Results are compared with Friedman's and Gates' models for competition against average competitors. Because markup adjustments are counterbalanced by shifts in probability of winning, contractor expected value is not very sensitive to markup, or its method of selection. However, the models vary considerably in their estimates of expected value. Gates' model is always more accurate than Friedman's model where variance of bids is due to variance of costs.

Why Do Sellers (Usually) Prefer Auctions

Abstract: We compare the most common methods for selling a company or other asset when participation is costly: a simple simultaneous auction, and a sequential process in which potential buyers decide in turn whether to enter the bidding. The sequential process is always more efficient. But preemptive bids transfer surplus from the seller to buyers. Because the auction is more conducive to entry―precisely because of its inefficiency―it usually generates higher expected revenue. We also discuss the effects of lock-ups, matching rights, break-up fees (as in takeover battles), entry subsidies, etc.

Bidder Behavior in Multiunit Auctions: Evidence from Swedish Treasury Auctions

Abstract: We analyze a unique data set on multiunit auctions, which contains the actual demand schedules of the bidders as well as the auction awards in over 400 Swedish Treasury auctions. First, we document that bidders vary their prices, bid dispersion, and the quantity demanded in response to increased uncertainty at the time of bidding. Second, we find that bid shading can be explained by a winner’s curse–driven model in which each bidder submits only one bid, despite the fact that the bidders in our data set use much richer bidding strategies. Third, we explore the extent to which the received theories of multiunit auctions are able to offer insights into the bidder behavior we observe. Our empirical evidence is consistent with some of the predictions of the models of auctions that emphasize private information, the winner’s curse and the champion’s plague. While the models of multiunit auctions serve as useful guideposts, our empirical findings also point to several new areas of research in multiunit auctions...