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Determinants of the number of bidders in the competitive procurement of electricity supply contracts in the Japanese public sector

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  • Hattori, Toru
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    Abstract

    Since the electricity retail market in Japan was partially opened to competition in 2000, many government entities have sought to solicit competing bids for the electricity supply to their office buildings or facilities, encouraging competition between the incumbents and new entrants. However, in many cases, only the incumbent utility bids for the contract and the competitive effects are limited. This paper presents a statistical analysis of bidders' participation in competitive procurement. We employ several count data regression models to explain the number of bidders other than the local electric utility. Our results suggest that the number of bidders would decrease in response to an increase in the load factor, perhaps because the new entrants are less competitive in serving customers with high load factors as they do not operate low-cost base-load power plants such as nuclear power plants; It would increase along with the voltage level and contract demand. The results also indicate that new entrants are more likely to participate in the bidding process in large city areas.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 32 (2010)
    Issue (Month): 6 (November)
    Pages: 1299-1305

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    Handle: RePEc:eee:eneeco:v:32:y:2010:i:6:p:1299-1305

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    Web page: http://www.elsevier.com/locate/eneco

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    Keywords: Retail electricity market Competitive procurement New entrants Electricity supply contracts Count data models;

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    1. William H. Greene, 1994. "Accounting for Excess Zeros and Sample Selection in Poisson and Negative Binomial Regression Models," Working Papers 94-10, New York University, Leonard N. Stern School of Business, Department of Economics.
    2. Otero, Jesus & Waddams Price, Catherine, 2001. "Price Discrimination, Regulation and Entry in the UK Residential Electricity Market," Bulletin of Economic Research, Wiley Blackwell, vol. 53(3), pages 161-75, July.
    3. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-33, March.
    4. Paul Klemperer, 2004. "Auctions: Theory and Practice," Economics Papers 2004-W09, Economics Group, Nuffield College, University of Oxford.
    5. Mullahy, John, 1986. "Specification and testing of some modified count data models," Journal of Econometrics, Elsevier, vol. 33(3), pages 341-365, December.
    6. Paul Klemperer, 2004. "Introduction to Auctions: Theory and Practice
      [Auctions: Theory and Practice]
      ," Introductory Chapters, Princeton University Press.
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    Cited by:
    1. Nobuhiro Hosoe & Shingo Takagi, 2011. "Retail Power Market Competition with Endogenous Entry Decision-An Auction Data Analysis," GRIPS Discussion Papers 11-01, National Graduate Institute for Policy Studies.

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