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Network Procurement Auctions

Author

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  • Thomas Greve
  • Michael G. Pollitt

Abstract

In most network asset procurement exercises, network configurations are predefined by the auctioneers. Bidders can neither propose different network configurations nor can they submit bids on a group of network links. We believe the market itself can be designed better. We present a lot structure and an auction design where bidders might propose and build different network configurations and where bidding for packages is a possibility. We demonstrate why the auction design in this paper should be considered for future network procurement exercises through an example, inspired by UK offshore electricity transmission assets, to illustrate our idea.

Suggested Citation

  • Thomas Greve & Michael G. Pollitt, 2013. "Network Procurement Auctions," Cambridge Working Papers in Economics 1347, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1347
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    File URL: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1347.pdf
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    References listed on IDEAS

    as
    1. Eduardo Engel & Ronald Fischer & Alexander Galetovic, 2013. "The Basic Public Finance Of Public–Private Partnerships," Journal of the European Economic Association, European Economic Association, vol. 11(1), pages 83-111, February.
    2. Philippe Burger & Ian Hawkesworth, 2011. "How To Attain Value for Money: Comparing PPP and Traditional Infrastructure Public Procurement," OECD Journal on Budgeting, OECD Publishing, vol. 11(1), pages 91-146.
    3. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
    4. Amaral, Miguel & Saussier, Stéphane & Yvrande-Billon, Anne, 2009. "Auction procedures and competition in public services: The case of urban public transport in France and London," Utilities Policy, Elsevier, vol. 17(2), pages 166-175, June.
    5. Klemperer, Paul, 1999. " Auction Theory: A Guide to the Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 13(3), pages 227-286, July.
    6. Paul Klemperer, 2004. "Auctions: Theory and Practice," Online economics textbooks, SUNY-Oswego, Department of Economics, number auction1.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Auctions; Networks; Investments;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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