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SUMMARY:The role of submodularity in capacity auctions - Eddie Anderson  (
 University of Sydney)
DTSTART:20190318T154500Z
DTEND:20190318T163000Z
UID:TALK121156@talks.cam.ac.uk
CONTACT:INI IT
DESCRIPTION:We consider a capacity auction in which multiple supplying fir
 ms offer bids\, and an agent\, the buyer\, selects which bids to accept. P
 ayments may depend on the set of bids accepted. We consider the role playe
 d by a submodularity property for the social welfare function in terms of 
 the set of participating firms. We show how submodularity leads to good pr
 operties for the equilibrium. We illustrate this through discussion of a c
 ase where the buyer faces uncertain demand and there are separate costs in
 curred by the suppliers for making capacity available (reservation costs) 
 and for delivering against the required demand (execution costs). We demon
 strate that when marginal costs are constant the submodularity property ho
 lds\, and in equilibrium each supplier makes a profit equal to their margi
 nal contribution and the overall expected welfare is maximized. Eddie Ande
 rson (Lusheng Shao and Bo Cheng)
LOCATION:Seminar Room 1\, Newton Institute
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