Bidding in an electricity pay-as-bid auction
AbstractOne of the main elements of the current reform of electricty trading in the UK is the change from a uniform price auction in the wholesale market to discriminatory pricing. We analyse 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 average prices 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), and ambiguous implications for prices and welfare.
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Bibliographic InfoPaper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2001-W5.
Date of creation: 01 Apr 2000
Date of revision: 01 Apr 2001
Contact details of provider:
Web page: http://www.nuff.ox.ac.uk/economics/
Multi-Unit Auctions; Price discrimination; Electricity;
Other versions of this item:
- Giulio Federico & David Rahman, 2001. "Bidding in an Electricity Pay-as-Bid Auction," Economics Series Working Papers, University of Oxford, Department of Economics 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-09-10 (All new papers)
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