The Case for a Discriminatory Pricing Rule in Competitive Electricity Pools

Ahmed W. Anwar ()

ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh

Abstract: We present a multi-unit common value auction model with capacity constraints which ensure the participants face a residual market. We show that a discriminatory auction performs better than a uniform one when such constraints are present. We then look at a more explicit model of electricity pools and show that the preferred uniform pricing rule can lead to equilibria that are even worse than the basic model suggests. We show that a discriminatory auction would lead to relatively more competitive prices.

Keywords: Electricity Pool; Multi-Unit Auction (search for similar items in EconPapers)
JEL-codes: D44 L13 L94 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-ene and nep-mic
Date: 2004-04
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Persistent link: http://EconPapers.repec.org/RePEc:edn:esedps:39

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