Chapter 72 Electric Power Market Design Issues and Laboratory Experiments The incentive failure of government ownership of public utility industries has helped to motivate the worldwide privatization of these industries. Similar shortcomings of rate of return regulation in the United States has led to major changes in the way in which the gas telephone and cable TV industries are regulated as public policy has leaned toward if not fully embraced the substitution of markets for direct regulation of these industries. Radical technological changes in long distance communication and transmission have also contributed to this accelerating trend. But such analysis does not deal with the question of how bidding behavior may be affected by line constraints; nor does it ask if optimization is supported by an equilibrium model. This chapter also inquires as to how market efficiency and the income shares of producers wholesale buyers and transmission line owners are altered with a variation on the auction market bidding rules. The effects of a line constraint and of changing the auction market rules are both examined under different levels of experience on the part of the subjects.