A wind tunnel test of wind farm auctions
通过实验室实验研究风电场拍卖设计，发现价格保证能提高效率和产量，而补贴效果弱于理论预测，风险规避会扭曲投标行为。
Globally, governments increasingly rely on auctions to advance renewable energy. We study the design of wind farm auctions and analyze the impact of price guarantees and subsidies. While in the theoretical analysis the price guarantee has no effect, our laboratory experiment suggests that it improves efficiency and often increases production and revenue. The price guarantee turns out to nullify correlations between participants’ willingness to take risks and their bids, which, in turn, improves efficiency relative to the case without price guarantee. The subsidy is less effective than suggested by theory. Bidders with a higher valuation tend to bid more conservatively than the equilibrium prediction, thus neutralizing the efficiency-enhancing effect of the subsidy. Our results may have implications for other auctions in which rights are allocated to enter markets characterized by heavy upfront investments and uncertainty about future payoffs. • We study wind farm auctions with common and private value elements using theory and experiments. • A price guarantee increases efficiency and production in the experiment, contrary to theory. • Subsidies have smaller experimental effects on efficiency than theory predicts. • Risk aversion distorts bidding and production, reducing efficiency. • Results have implications for auctions with large upfront investments and uncertainty.