A more efficient procurement mechanism for reserver capacity in the German market for balancing power
From auction theory we know that multi-unit, pay-as-bid auctions in general lead to bid shading and thus to an inefficient allocation. This result is supported by historical data from the German market for balancing power, which show that bidders bid well above their actual costs. In contrast to the pay-as-bid auction, the Vickrey auction has the dominant strategy property and bidders reveal their true opportunity cost. Consequently, the Vickrey auction allocates efficiently. In this article we show how this auction format can facilitate an efficient capacity procurement process in the German reserve market.
|Date of creation:||2011|
|Date of revision:|
|Contact details of provider:|| Postal: 02 51 / 83-2 29 10|
Phone: 02 51 / 83-2 29 10
Fax: 02 51 / 83-2 83 99
Web page: http://www.wiwi.uni-muenster.de/cawm/
More information through EDIRC
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.:
- Flinkerbusch, Kai & Heuterkes, Michael, 2010. "Cost reduction potentials in the German market for balancing power," Energy Policy, Elsevier, vol. 38(8), pages 4712-4718, August.
- Richard Engelbrecht-Wiggans & Charles M. Kahn, 1998. "Multi-unit auctions with uniform prices," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(2), pages 227-258.
- 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.
- repec:rje:randje:v:37:y:2006:1:p:23-46 is not listed on IDEAS
- 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.
- Engelbrecht-Wiggans, Richard & Kahn, Charles M., 1998. "Multi-Unit Pay-Your-Bid Auctions with Variable Awards," Games and Economic Behavior, Elsevier, vol. 23(1), pages 25-42, April.
- Müller, Gernot & Rammerstorfer, Margarethe, 2008. "A theoretical analysis of procurement auctions for tertiary control in Germany," Energy Policy, Elsevier, vol. 36(7), pages 2620-2627, July.
- Author One David Harbord & Author Two Chris McCoy, 2002. "Mis-Designing the UK Electricity Market," Industrial Organization 0203003, EconWPA.
- Jeroen M. Swinkels, 1999. "Asymptotic Efficiency for Discriminatory Private Value Auctions," Review of Economic Studies, Oxford University Press, vol. 66(3), pages 509-528.
When requesting a correction, please mention this item's handle: RePEc:zbw:cawmdp:52. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.