Sunday, February 2, 2014

Egg Quota Sale by Auction

Egg Farmers of Ontario have implemented a new system for the sale of egg quota via a truncated k-double auction system.  See Better Farming's coverage, Egg & Pullet Quota Transfer System, and The first EFO quota sale announcement.

This Blog previously posted about this truncated k-double auction auction mechanism back in May 2013
A similar system was implemented by La Fédération des producteurs d’oeufs de consommation du Québec and of Les Éleveurs de Volailles du Québec  They designed their system as of Nov. 2008, and had it running since May 2009.  Their 36 page rule book for the Quebec egg quota auctions was published in Nov. 2008

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 )

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