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Multidimensional Auctions for Public Energy Efficiency Projects: Evidence from Japanese Esco Market

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  • Atsushi Iimi

    () (The World Bank Group)

Abstract

Abstract Competitive bidding is an important policy tool for governments to procure goods and services at the lowest possible cost in the market. Under the traditional public procurement system, however, it is difficult to purchase a highly customized object, such as energy efficiency services, because not only prices but also other nonmonetary aspects need to be taken into account. Multidimensional auctions are useful in such cases. The paper examines the cluster of characteristics of the winning bids of multidimensional auctions for public energy service company (ESCO) projects in Japan. As theory predicts, it is found that the competition effect is significant. Other institutional aspects—such as preannouncement of an energy savings target—are also found important to promote energy efficiency. The results also indicate that the public sector should absorb the regulatory and institutional risks that are related to ESCO projects.

Suggested Citation

  • Atsushi Iimi, 2016. "Multidimensional Auctions for Public Energy Efficiency Projects: Evidence from Japanese Esco Market," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(3), pages 491-514, November.
  • Handle: RePEc:kap:revind:v:49:y:2016:i:3:d:10.1007_s11151-016-9510-7
    DOI: 10.1007/s11151-016-9510-7
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    References listed on IDEAS

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    Keywords

    Multidimensional auction; Energy efficiency; Risk sharing;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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