Experimental analysis of the efficiency of uniform-price versus discriminatory auctions in the England and Wales electricity market

The question of whether the uniform price or discriminatory auction format is the better multi-unit auction mechanism is addressed in the context of t he 1999 debate on reforming the England & Wales electricity market. Each ge nerator is modelled as an autonomous adaptive agent capable of endogenously developing its own bidding strategies using a naive reinforcement learning algorithm. The discriminatory auction results in higher market prices than the uniform-price auction. This is because market prices are not publicly available and agents with a large market share gain a significant informati onal advantage in a discriminatory auction, thereby facing less competitive pressure. (C) 2001 Elsevier Science B.V. All rights reserved. JEL classifi cation: C63; C7; D43; D44; L94.