Designing Electricity Auctions

Natalia Fabra (), Nils-Henrik Von der Fehr and David Harbord ()

Open Access publications from Universidad Carlos III de Madrid from Universidad Carlos III de Madrid

Abstract: Motivated by the new auction format introduced in the England andWales electric- ity market, as well as the recent debate in California, we characterize bidding behavior and market outcomes in uniform and discriminatory electricity auctions. We ¯nd that uniform auctions result in higher average prices than discriminatory auctions, but the ranking in terms of productive e±ciency is ambiguous. The comparative e®ects of other market design features, such as the number of steps in suppliers' bid functions, the duration of bids and the elasticity of demand are also analysed. We also consider the relationship between market structure and market performance in the two auction formats. Finally, we clarify some methodological issues in the analysis of electricity auctions. In particular, we show that analogies with continuous share auctions are misplaced so long as ¯rms are restricted to a ¯nite number of bids.

Keywords: Market design; electricity; multi-unit auctions; regulatory reform (search for similar items in EconPapers)
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Related works:
Journal Article: Designing electricity auctions (2006)
Journal Article: Designing Electricity Auctions (2006)
Working Paper: Designing Electricity Auctions (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:ner:carlos:info:hdl:10016/5008

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