Payment versus bid cost [The Business Scene

Abstract

This article summarizes the recent developments in the solution methodology of payment-cost minimization and the economic analysis of the two auction methods. Topics such as revenue adequacy implications are brought into discussion. Generally speaking, the research on the appraisal of the two auction methods is still at the early stages, and that a comprehensive study of the two auction methods is highly valuable for both researchers and industrial practitioners. This article can initiate more serious debate among researchers and stakeholders as to which objective should be used in ISO markets.