This Blog previously posted about this truncated k-double auction auction mechanism back in May 2013
- May 25, 2013 SFPFC's posting Draft Plan for Ending Canada's Supply Management, Revision #2
- June 5, 2013 SFPFC posting Clarification of non-SM Product Auctions )
- June 14, 2013 on Better Farming Egg farmers’ quota exchange won’t include transfers within families
In April 2010 a research paper written by Maurice Doyon, Daniel Rondeau, and Richard Mbala (see Keep It Down: An Experimental Test of the Truncated k-Double Auction ) described the technical basis behind the Quebec egg quota auction system. I assume that this is the same system design that will be used in Ontario starting March 2014.
The truncated k-double auction means that both buyer and seller must submit bids with the quantity desired and their bid price. If you bid too low or too high, then you don't get to sell your quota. This keeps prices for quota from getting inflated, as there is only a small market, and there is usually far more buyers than sellers, and this tends to drive up prices. After all, Supply Management is like buying the winning lottery ticket the day after the draw has been done. A guaranteed winner that allows raping of the Canadian public.
At least now, there will be a small check force on the greed factor.
Tomorrow, we discuss how to use this same or similar system for revamping Canada's Supply Management system to balance the system between farmer and consumer (see Modify Supply Management before it's too late )