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Technology-Neutral vs. Technology-Specific Procurement


  • Fabra, Natalia
  • Montero, Juan Pablo


An imperfectly-informed regulator needs to procure multiple units of a good that can be produced with heterogeneous technologies at various costs. Should she run technology-specific or technology-neutral auctions? Should she allow for partial separation across technologies (technology banding)? Should she instead post separate prices for each technology? What are the trade-offs involved? We find that one size does not fit all: the preferred instrument depends on the nature of the available technologies, the extent of information asymmetry regarding their costs, the costs of public funds, and the degree of market power. Using Spanish data on recently deployed renewables across the country, we illustrate how our theory can shed light on how to more effectively procure these technologies. Beyond this motivation/application, the question of how to procure public goods in the presence of multiple technologies is relevant for a wide variety of goods, including central banks liquidity, pollution reduction, or land conservation, among others.

Suggested Citation

  • Fabra, Natalia & Montero, Juan Pablo, 2020. "Technology-Neutral vs. Technology-Specific Procurement," CEPR Discussion Papers 15554, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:15554

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    1. Lamp, Stefan & Samano, Mario, 2020. "(Mis)allocation of Renewable Energy Sources," TSE Working Papers 20-1103, Toulouse School of Economics (TSE).
    2. John Harvey Vargas-Cano & David Tobón-Orozco & Carlos Vasco-Correa, 2023. "The Protection of the Capacity for Resilience in the Provision of Drinking Water from Hybrid Environmental Policy Instruments," Sustainability, MDPI, vol. 15(11), pages 1-17, May.
    3. Fabra, Natalia, 2021. "The energy transition: An industrial economics perspective," International Journal of Industrial Organization, Elsevier, vol. 79(C).
    4. Mats Kröger & Karsten Neuhoff & Jörn C. Richstein, 2022. "Discriminatory Auction Design for Renewable Energy," Discussion Papers of DIW Berlin 2013, DIW Berlin, German Institute for Economic Research.

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    Procurement; Auctions; Quantity regulation; Price regulation; Third degree price discrimination; market power;
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