Bidding in an Electricity Pay-as-Bid Auction
AbstractOne of the main elements of the recent reform of electricity trading in the United Kingdom is the change from a uniform price auction in the wholesale market to discriminatory pricing. We analyze this change under two polar market structures (perfectly competitive and monopolistic supply), with demand uncertainty. We find that under perfect competition there is a trade-off between efficiency and consumer surplus between the two auction rules. We also establish that a move from uniform to discriminatory pricing under monopoly conditions has a negative impact on profits and output (weakly), a positive impact on consumer surplus, and ambiguous implications for welfare and average prices. Copyright 2003 by Kluwer Academic Publishers
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Bibliographic InfoArticle provided by Springer in its journal Journal of Regulatory Economics.
Volume (Year): 24 (2003)
Issue (Month): 2 (September)
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Web page: http://www.springerlink.com/link.asp?id=100298
Other versions of this item:
- Giulio Federico & David Rahman, 2000. "Bidding in an electricity pay-as-bid auction," Economics Papers 2001-W5, Economics Group, Nuffield College, University of Oxford, revised 01 Apr 2001.
- Giulio Federico & David Rahman, 2001. "Bidding in an Electricity Pay-as-Bid Auction," Economics Series Working Papers 2001-W05, University of Oxford, Department of Economics.
- D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
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