A theoretical analysis of procurement auctions for tertiary control in Germany
As far as energy policy is concerned, the design of the regulatory framework for energy transmission and distribution is a key issue. Consequently, also the embodiment of balancing power markets drives mainly the effectiveness of political implications for the energy sector. Initially, tertiary control in Germany was solely offered by transmission system operators of the respective power control areas and their associated power plant. The recast of the Energy Industry Act of 2005 led in last consequence to a common procurement auction for the supply of tertiary control, which starts on December 1, 2006. Admittedly, the reform has fallen short of expectations so far, first concerning the intensification of market entry of tertiary control providers as well as the desired decline of the price level. Hence, this article examines the effects of the changeover on observable demand charges. In order to identify attributes of the common procurement auction for tertiary control hampering market entry of providers, giving stimuli to collusion and strategic behavior, reducing intensity of competition and encouraging an upswing of prices, we analyze the design under an auction theoretical approach and deduce empirically whether structural components of the auction design have to be touched up again.
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.:
- 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 109-123, March.
- 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.
- 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.
- 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.
- Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
- Professor Paul Klemperer, 2000. "What Really Matters in Auction Design," Microeconomics 0004008, EconWPA.
- Klemperer, Paul, 2000. "What Really Matters in Auction Design," CEPR Discussion Papers 2581, C.E.P.R. Discussion Papers.
- Federico, Giulio & Rahman, David, 2003. "Bidding in an Electricity Pay-as-Bid Auction," Journal of Regulatory Economics, Springer, vol. 24(2), pages 175-211, September.
- 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.
- Fabra, Natalia & von der Fehr, Nils-Henrik & Harbord, David, 2002. "Modeling Electricity Auctions," The Electricity Journal, Elsevier, vol. 15(7), pages 72-81.
- David Harbord & Natalia Fabra & Nils-Henrik von der Fehr, 2002. "Modeling Electricity Auctions," Game Theory and Information 0206001, EconWPA.
- Woo, Chi-Keung & Lloyd, Debra & Tishler, Asher, 2003. "Electricity market reform failures: UK, Norway, Alberta and California," Energy Policy, Elsevier, vol. 31(11), pages 1103-1115, September.
- Borenstein, Severin & Bushnell, James, 1999. "An Empirical Analysis of the Potential for Market Power in California's Electricity Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 47(3), pages 285-323, September.
- Severin Borenstein & James Bushnell, 1998. "An Empirical Analysis of the Potential for Market Power in California's Electricity Industry," NBER Working Papers 6463, National Bureau of Economic Research, Inc.
- Goswami, Gautam & Noe, Thomas H & Rebello, Michael J, 1996. "Collusion in Uniform-Price Auctions: Experimental Evidence and Implications for Treasury Auctions," Review of Financial Studies, Society for Financial Studies, vol. 9(3), pages 757-785.
- Gautam Goswami & Thomas H. Noe & Michael J. Rebello, 1995. "Collusion in uniform-price auctions: experimental evidence and implications for Treasury auctions," FRB Atlanta Working Paper 95-5, Federal Reserve Bank of Atlanta.
- Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-1277, November.
- McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June. Full references (including those not matched with items on IDEAS)