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Designing Electricity Auctions Author info | Abstract | Publisher info | Download info | Related research | Statistics Natalia Fabra (Universidad Carlos III)
Nils-Henrik von der Fehr (University of Oslo)
David Harbord (Market Analysis)
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Motivated by the new auction format introduced in the England and Wales electricity market, as well as the recent debate in California, we characterize bidding behavior and market outcomes in uniform and discriminatory electricity auctions. We find that uniform auctions result in higher average prices than discriminatory auctions, but the ranking in terms of productive efficiency is ambiguous. The comparative effects of other market design features, such as the number of steps in suppliers' bid functions, the duration of bids and the elasticity of demand are also analysed. We also consider the relationship between market structure and market performance in the two auction formats. Finally, we clarify some methodological issues in the analysis of electricity auctions. In particular, we show that analogies with continuous share auctions are misplaced so long as firms are restricted to a finite number of bids.
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Paper provided by EconWPA in its series Microeconomics with number
0211017.
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Length: 37 pages
Date of creation: 21 Nov 2002Date of revision:
31 Aug 2003Handle: RePEc:wpa:wuwpmi:0211017Note: Type of Document - pdf; prepared on PC-TEX; pages: 37Contact details of provider: Web page: http://129.3.20.41
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Keywords: Market design ; electricity ; multi-unit auctions ; regulatory reform ; Other versions of this item:
Find related papers by JEL classification: D44 - Microeconomics - - Market Structure and Pricing - - - Auctions L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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Pär Holmberg, 2009.
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Christian Vossler & Timothy Mount & Robert Thomas & Ray Zimmerman, 2009.
"An experimental investigation of soft price caps in uniform price auction markets for wholesale electricity ,"
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de Frutos, Maria-Angeles & Fabra, Natalia, 2007.
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"Subastando la Energía para Clientes Regulados: Un Análisis de Equilibrio ,"
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Bourjade, Sylvain, 2003.
"Strategic Price Discounting and Rationing in Uniform Price Auctions [Rationing as a Strategic Tool in Uniform Price Auctions] ,"
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Other versions: Natalia Fabra & Juan Toro, 2003.
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