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Strategic Behaviour, Resource Valuation and Competition in Electricity Markets

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  • Miguel A. Espinosa

    ()

  • Alvaro J. Riascos Villegas

    ()

Abstract

By means of a suitable Bayesian game we study spot electricity markets from a structural point of view. We address the problem of individual and aggregate eficciency and we show how to value water from market observables. We compare the former to engineering methods and apply our methodology to Colombian spot electricity market. Our results show that big gas and small hydro plants overbid, resources are undervalued by engineering costs and aggregate costs would have been considerably smaller if agents had played optimally. Revealed costs show a substantial gain in eficciency in the Vickrey auction compared to the actual uniform auction.

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File URL: http://economia.uniandes.edu.co/publicaciones/dcede2010-10.pdf
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Bibliographic Info

Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 006856.

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Length: 28
Date of creation: 07 Mar 2010
Date of revision:
Handle: RePEc:col:000089:006856

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Keywords: Multi-unit auctions; Oligopoly; electricity markets;

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  1. Miguel Andrés Espinosa Farfán, 2009. "Una aproximación al problema de optimalidad y eficiencia en el sector eléctrico colombiano," DOCUMENTOS CEDE 005402, UNIVERSIDAD DE LOS ANDES-CEDE.
  2. Umlauf, Steven R., 1993. "An empirical study of the Mexican Treasury bill auction," Journal of Financial Economics, Elsevier, vol. 33(3), pages 313-340, June.
  3. Luciano I. De Castro & Alvaro Riascos, 2007. "Characterization of Bidding Behavior in Multi-Unit," DOCUMENTOS CEDE 004382, UNIVERSIDAD DE LOS ANDES-CEDE.
  4. Harry J. Paarsch & Han Hong, 2006. "An Introduction to the Structural Econometrics of Auction Data," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262162350, December.
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Cited by:
  1. Espinosa, Miguel & Forero, German & Villaneda, Felipe, 2011. "The practice of the auction theory: The Colombian case," MPRA Paper 31150, University Library of Munich, Germany.

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