Holmberg, Par and Wolak, Frank, Electricity Markets: Designing Auctions Where Suppliers Have Uncertain Costs (December 17, 2015). IFN Working Paper No. 1099. Available for download at SSRN: http://ssrn.com/abstract=2705568

“We analyse how the market design influences the bidding behaviour in multi-unit auctions, such as wholesale electricity markets. It is shown that competition improves for increased market transparency and we identify circumstances where the auctioneer prefers uniform to discriminatory pricing. We note that political risks could significantly worsen competition in hydro-dominated markets. It would be beneficial for such markets to have clearly defined contingency plans for extreme market situations.”