Bidding strategies analysis in the optimization model of auctioning total permitted pollution discharge capacity

In this paper, the method of allocating the total permitted pollution discharge capacity(TPPDC) is studied. Based on the divisible goods auction, an optimization auction model to allocate the TPPDC is established, and the polluters´ bidding strategies are emphatically discussed. Aiming at maximizing the polluters´ expected-utility values, a linear equilibrium auction strategy and a nonlinear equilibrium auction strategy are deduced. It is concluded that the linear equilibrium auction strategy strictly dominates the nonlinear equilibrium auction strategy, which help polluters to bid rationally in the TPPDC auction.