Skip to Main Content
 

Global Search Box

 
 
 

ETD Abstract Container

Abstract Header

Essays in Market Design Economics

Duggan, Joseph Edward, Jr.
http://rave.ohiolink.edu/etdc/view?acc_num=osu1523987836603592

Abstract Details

2018, Doctor of Philosophy, Ohio State University, Economics.
Economic theory has increasingly been brought to bear in designing and improving markets in the real world. Using tools drawn from economics, game theory, and operations research, market design economists attempt to better understand real-world allocation problems in light of the unique constraints faced in particular markets, broadly defined. This dissertation studies several different aspects of market design. The first chapter introduces the content of the dissertation. The second chapter consists of a comparison of two uniform price auction formats used in wholesale electricity markets: centrally and self-committed markets. Both types of markets are operated by an independent third-party market operator, which solicits supply offers from generators and determines how much energy they produce to serve customer demand. In centrally committed markets, generators submit complex offers that convey all of their non-convex operating costs and constraints. Conversely, generators submit simple offers in self-committed markets that only specify the amount of energy that they are willing to produce at a given price. Thus, generators must internalize their non-convex costs and other operating constraints in submitting offers in a self-committed market. Centrally committed markets also include a provision that each generator is made whole on the basis of its submitted offers. No such guarantees exist in self-committed mar- kets. The energy-cost ranking and incentive properties of the two market designs in a multi-firm oligopoly setting are studied and it is found that cost equivalence between the two market designs break down when there are three or more firms. The third chapter of the dissertation studies a one sided many-to-many matching model called the Stable Fixtures problem. First studied by Irving and Scott (2007), the Stable Fixtures Problem is a generalization of the Stable Roommates problem. A pair-wise stable matching is not guaranteed to exist for a given instance of the fixtures problem. In this chapter, a psychologically motivated class of preferences that guarantees the existence of a pair-wise stable matching are explored and potential applications of this model for electricity markets are discussed. In the fourth chapter, we model a proposed Power Purchase Agreement (PPA) in a stylized Nash-Cournot setting, demonstrating that the proposed PPA has incentive properties that can lead to socially undesirable equilibria. The proposed PPA would entail guaranteeing a predetermined profit level to a generating firm, which is paid by confiscating revenues from the non-subsidized generating firms. The PPA is ostensibly designed to ensure that generating firms with large fixed costs are able to supply power. However, we demonstrate that the proposed PPA may in fact have the exact opposite effect: there exist equilibria where the subsidized firm produces no output and the other generating firms obtain higher profits, a greater wholesale price, and there is a lower aggregate quantity produced in the market. The proposed PPA can result in (i) an inefficient firm that would otherwise exit the market in the absence of the subsidy is subsidized to produce nothing, or (ii) an economically viable firm would rather idle its generating capacity and collect its subsidy than produce. The fifth chapter concludes with a discussion of directions for future research.
Lixin Ye, Ph.D. (Advisor)
Ramteen Sioshansi, Ph.D. (Advisor)
119 p.
Economic Theory
Economics, Market Design

Recommended Citations

Citations

  • Duggan, Jr., J. E. (2018). Essays in Market Design Economics [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1523987836603592

    APA Style (7th edition)

  • Duggan, Jr., Joseph. Essays in Market Design Economics. 2018. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1523987836603592.

    MLA Style (8th edition)

  • Duggan, Jr., Joseph. "Essays in Market Design Economics." Doctoral dissertation, Ohio State University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=osu1523987836603592

    Chicago Manual of Style (17th edition)

osu1523987836603592
371
© 2018, all rights reserved.
This open access ETD is published by The Ohio State University and OhioLINK.