 Evaluating capacity auction design for electricity: An experimental analysisDespina Yiakoumi, Agathe Rouaix and Euan Phimister () Energy Economics, 2022, vol. 115, issue C Abstract: This paper considers the design of multi-unit procurement auctions relevant for electricity capacity markets drawing on the structure of the market introduced in Great Britain. Simple games are used to generate predictions about the impact of information feedback between auction rounds and the shape of the demand curve. These predictions are used as benchmarks and tested using a series of economic experiments. The results show that participants recognize their own and their opponents' market power opportunities, raising clearing prices and lowering allocative efficiency. No information feedback between rounds reduces average clearing prices and the risk of not achieving the supply target but also typically reduces allocative efficiency. A downward sloping step-demand function leads to competitive prices no matter what the level of feedback is but not necessarily to allocative efficiency. It also significantly increases the risk of not achieving the target level of supply. Keywords: Capacity auction design; Clock auction; Experimental economics; Market design; Market power (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:115:y:2022:i:c:s0140988322004996 DOI: 10.1016/j.eneco.2022.106370 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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