EC 201 Lecture Notes - Lecture 2: Normal Good, Electricity Market, Multiunit Auction
11 Apr 2017
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Document Summary
Think about market for hair-cutting services in eug. What do you have to give up to get it? (p) How much of societies resources are allocated? (q) I will sell 10 megawatt-hours for 25 from 11-11:30 sees forecast of demand picks allocation: p, q, & who allocations = distribution of scarce resources among scarce resources among various participants in an economy. 15 x x x x x x k. Big idea: when demand is high, price is high. Not working together as cartel best strategy is to bid close or equal to cost. W/ many bidders chance you will be exact last supplier is small therefore, bid is likely to determine if you are in or out if you bid more, chance system price will be higher than cost. Suppose cost is 20 & you bid 15. In a uniform price auction; all cartels need to do is manipulate the price of the last unit in & all members benefit.
