Designing electricity auctions
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.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 37 (2006)
Issue (Month): 1 (03)
|Contact details of provider:|| Postal: 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407-2138|
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0741-6261
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishing.com/journal.asp?ref=0741-6261|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Green, Richard J & Newbery, David M, 1992.
"Competition in the British Electricity Spot Market,"
Journal of Political Economy,
University of Chicago Press, vol. 100(5), pages 929-53, October.
- Green, Richard & Newbery, David M G, 1991. "Competition in the British Electricity Spot Market," CEPR Discussion Papers 557, C.E.P.R. Discussion Papers.
- Eric Maskin & John Riley, 2000. "Asymmetric Auctions," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 413-438.
- Peter Cramton & Robert Wilson, 1998. "A Review of ISO New England's Proposed Market Rules," Papers of Peter Cramton 98mdi, University of Maryland, Department of Economics - Peter Cramton.
- Rassenti, Stephen J & Smith, Vernon L & Wilson, Bart J, 2003. "Discriminatory Price Auctions in Electricity Markets: Low Volatility at the Expense of High Price Levels," Journal of Regulatory Economics, Springer, vol. 23(2), pages 109-23, March.
- Paul Klemperer, 2000.
"Why Every Economist Should Learn Some Auction Theory,"
- Klemperer, Paul, 2000. "Why every Economist should Learn some Auction Theory," CEPR Discussion Papers 2572, C.E.P.R. Discussion Papers.
- Paul Klemperer, 2000. "Why Every Economist Should Learn some Auction Theory," Economics Series Working Papers 2000-W25, University of Oxford, Department of Economics.
- Lisa Cameron & Peter Cramton, 1999.
"The Role of the ISO in U.S. Electricity Markets: A Review of Restructuring in California and PJM,"
Papers of Peter Cramton
99ej, University of Maryland, Department of Economics - Peter Cramton, revised 01 Apr 1999.
- Cameron, Lisa & Cramton, Peter, 1999. "The Role of the ISO in U.S. Electricity Markets: A Review of Restructuring in California and PJM," The Electricity Journal, Elsevier, vol. 12(3), pages 71-81, April.
- Nils-Henrik von der Fehr & David Harbord, 2002.
"Competition in Electricity Spot Markets: Economic Theory and International Experience,"
- von der Fehr, N.-H. & Harbord,D., 1998. "Competition in Electricity Spot Markets. Economic Theory and International Experience," Memorandum 05/1998, Oslo University, Department of Economics.
- Giulio Federico & David Rahman, 2000.
"Bidding in an electricity pay-as-bid auction,"
2001-W5, Economics Group, Nuffield College, University of Oxford, revised 01 Apr 2001.
- von der Fehr, Nils-Henrik Morch & Harbord, David, 1993.
"Spot Market Competition in the UK Electricity Industry,"
Royal Economic Society, vol. 103(418), pages 531-46, May.
- Von der Fehr, N.H.M. & Harbord, D., 1992. "Spot Market Competition in the UK Electricity Industry," Memorandum 09/1992, Oslo University, Department of Economics.
- Brunekreeft, Gert, 2001. "A multiple-unit, multiple-period auction in the British electricity spot market," Energy Economics, Elsevier, vol. 23(1), pages 99-118, January.
- Lawrence Ausubel & Peter Cramton, 2004.
"Vickrey auctions with reserve pricing,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(3), pages 493-505, March.
- Klemperer, Paul, 2000.
"What Really Matters in Auction Design,"
CEPR Discussion Papers
2581, C.E.P.R. Discussion Papers.
- Lawrence M. Ausubel & Peter Cramton & Marek Pycia & Marzena Rostek & Marek Weretka, 2014.
"Demand Reduction and Inefficiency in Multi-Unit Auctions,"
Review of Economic Studies,
Oxford University Press, vol. 81(4), pages 1366-1400.
- Lawrence M. Ausubel & Peter Cramton, 1995. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Papers of Peter Cramton 98wpdr, University of Maryland, Department of Economics - Peter Cramton, revised 22 Jul 2002.
- Robert Wilson, 1979. "Auctions of Shares," The Quarterly Journal of Economics, Oxford University Press, vol. 93(4), pages 675-689.
- García-Díaz, Antón & Marín Uribe, Pedro Luis, 2000. "Strategic Bidding in Electricity Pools with Short-Lived Bids: An Application to the Spanish Market," CEPR Discussion Papers 2567, C.E.P.R. Discussion Papers.
- Alfred E. Kahn & Peter Cramton & Robert H. Porter & Richard D. Tabors, 2001.
"Uniform Pricing or Pay-as-Bid Pricing: A Dilemma for California and Beyond,"
Papers of Peter Cramton
01ej, University of Maryland, Department of Economics - Peter Cramton, revised 27 Jan 2001.
- Kahn, Alfred E. & Cramton, Peter C. & Porter, Robert H. & Tabors, Richard D., 2001. "Uniform Pricing or Pay-as-Bid Pricing: A Dilemma for California and Beyond," The Electricity Journal, Elsevier, vol. 14(6), pages 70-79, July.
- Author One David Harbord & Author Two Chris McCoy, 2002. "Mis-Designing the UK Electricity Market," Industrial Organization 0203003, EconWPA.
- Rothkopf, Michael H & Teisberg, Thomas J & Kahn, Edward P, 1990. "Why Are Vickrey Auctions Rare?," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 94-109, February.
- Parisio, Lucia & Bosco, Bruno, 2003. "Market Power and the Power Market: Multi-unit Bidding and (In)Efficiency in Electricity Auctions," International Tax and Public Finance, Springer, vol. 10(4), pages 377-401, August.
- Robert Wilson, 2002. "Architecture of Power Markets," Econometrica, Econometric Society, vol. 70(4), pages 1299-1340, July.
- Natalia Fabra, 2003. "Tacit Collusion in Repeated Auctions: Uniform Versus Discriminatory," Journal of Industrial Economics, Wiley Blackwell, vol. 51(3), pages 271-293, 09.
- Hobbs, Benjamin F, et al, 2000. "Evaluation of a Truthful Revelation Auction in the Context of Energy Markets with Nonconcave Benefits," Journal of Regulatory Economics, Springer, vol. 18(1), pages 5-32, July.
When requesting a correction, please mention this item's handle: RePEc:bla:randje:v:37:y:2006:i:1:p:23-46. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.