Auctions with Privately Known Capacities: Understanding Competition Among Renewables

Abstract We study a multi-unit auction model in which bidders are privately informed about the maximum number of units they willing to trade (which we refer as ‘capacity’). No matter how big or small, private information on capacities changes nature equilibrium compared when is costs (or valuations). Also, uniform-price and discriminatory auctions not revenue equivalent, contrast independently drawn. In particular, with drawn (and possibly costs), format reduces payments firms relative format. Our analysis motivated by performance future electricity markets renewable energies will be predominant, but set-up also applies variety contexts (from central bank liquidity emissions trading).