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For Activity Rule

The activity rule defines how a bidder's eligibility and allowed activity are determined in each clock round of an auction. A bidder's activity must be less than or equal to its eligibility. Activity is the sum of eligibility points associated with areas bid on, while eligibility decreases if activity is less than the required percentage of the clock round. The final round occurs when aggregate demand is less than or equal to available blocks and the activity requirement reaches 100%.

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41 views6 pages

For Activity Rule

The activity rule defines how a bidder's eligibility and allowed activity are determined in each clock round of an auction. A bidder's activity must be less than or equal to its eligibility. Activity is the sum of eligibility points associated with areas bid on, while eligibility decreases if activity is less than the required percentage of the clock round. The final round occurs when aggregate demand is less than or equal to available blocks and the activity requirement reaches 100%.

Uploaded by

Rahul Awtans
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Activity Rule

• Important terms to define activity rule-


• EMD requirement of a bidder =
In the first CR, sum of EMD requirements of service areas where bidder wishes to place the bids
In subsequent rounds, sum of (EMD requirements of the service areas where it was a provisional winning
bidder in previous CR + EMD requirements of the service areas where it wasn’t the provisional winning
bidder in previous CR but it plans to bid in current CR)
• Activity of a bidder =
In first CR, eligibility points associated with the service areas where it places a bid
In subsequent rounds, sum of (eligibility points of the service areas where it was a provisional winning
bidder in previous CR + eligibility points of the service areas where it wasn’t the provisional winning
bidder in previous CR but it plans to bid in current CR)
• Activity requirement of a CR = a prefixed percentage of the eligibility points in this CR (ceiling value)
(starts with 80%, increments to 90% and 100% decided by auction administrator when to increment it and for
how many rounds)
• Eligibility of a bidder in R+1 =
bidder’s eligibility in the R if bidder’s activity in R >= bidder’s activity requirement in R
activity in R / activity requirement in R otherwise
• Clock round price of a service area’s block =
In the first CR, the reserve price
In subsequent CRs, CR price of previous CR (when excess demand < 0 ) or CR price of previous CR
plus a strictly positive increment (when excess demand is >=0)
• Aggregate demand of a CR = no. of bids in a service area at a value equal to clock round price
• Excess demand of a CR = aggregate demand minus no. of blocks available in the service area
What is the activity rule?
• In a CR, a bidder can only bid for the combination of service areas
whose EMD requirement <= EMD deposited by it, and
• Activity of the bidder in a CR <= its eligibility in the CR
• The final clock round will be the first round in which
• No. of bids in the current CR at the CR price <= no. of available blocks, and
• Activity requirement has been increased to 100%
Service Area Type No. of service Reserve price EMD requirement Eligibility points of a
areas in this (Rs. crores) of a service area (Rs. block of this type of
type crores) service area
Delhi, Mumbai, Category A 7 320 40 32

Kolkata, Category B 9 120 20 12

Category C 6 30 7.5 3
Total service areas 22
Example- Assumptions-
5 bidders V, W, X, Y, Z
Each wants to place bid for Delhi (category A) and a service area in Haryana (category B). These service areas A and B both have 3
blocks.
V pays Rs. 60 crores as EMD while W, X, Y, Z pay EMD of Rs. 65 crores each.

CR1
Bidder Service Service Ranks for Ranks Bidder’s
EMD requirement for each bidder = area A area B A’s block for B’s activity
block block block
Eligibility points = bid bid
Activity requirement = 80% of eligibility points =
V 320 122
CR Price = (Reserve price)
Provisional Winning bidders of service area A will be W 322 124
X 330 125
Provisional Winning Price of this area = Y 320 -
Provisional Winning bidders of service area B will be
Z 325 130
Provisional Winning Price of this area =
Aggregate demand of service area A = ? , Excess demand = ?
Aggregate demand of service area B = ?, Excess demand = ?

Which move to the next round? That meet the activity requirement ->
Acronyms used in the slides
• EMD = Earnest Money Deposit
• CR = Clock Round
• R= current clock round
• R+1 = next clock round

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