Andy Philpott - (Auckland University)

Auctions of divisible-goods occur in a number of settings, the most well-known being electricity pool-markets. There are two common payment mechanisms for these auctions, one where a uniform price is paid to all suppliers, and an alternative that adopts a discriminatory, or pay-as-bid, price. Under the assumptions that demand is uncertain and costs are common knowledge, we study supply-function equilibria in the pay-as-bid auction using the concept of market-distribution functions. We show that pure-strategy Nash equilibria typically do not exist in this setting, and derive mixed-strategy equilibria of various types