uniformprice

Uniform price is a pricing mechanism used in auctions and markets in which all units traded in a session clear at a single, common price, known as the uniform or market-clearing price. In a typical uniform-price auction, participants submit bids or offers specifying quantities and prices. The market organizer ranks supply offers from low to high and demand bids from high to low, then identifies the quantity where cumulative supply meets demand. The price at that intersection becomes the uniform price. All winning sellers receive that price for their units, and all winning buyers pay that same price, regardless of the individual bid or offer.

Uniform-price auctions are widely used in wholesale electricity markets, particularly in day-ahead and real-time markets, where the marginal unit sets the price for all participants. The mechanism can also be found in certain commodity auctions and some government securities markets, though many other markets use discriminatory or pay-as-bid pricing.

Advantages of uniform pricing include price transparency, simplicity, and the incentive for participants to bid based on true costs rather than strategic price discrimination. Potential drawbacks include susceptibility to market power, especially when a few participants can influence the clearing price, and price volatility in tight supply conditions. Critics also note that strategic bidding can influence the marginal price, affecting welfare and efficiency in the market.