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Assessing Brazilian electric power transmission auctions: A copula-based sample selection model

Washington Martins Silva and Osvaldo Candido ()

Journal of Economic Studies, 2020, vol. 47, issue 1, 182-199

Abstract: Purpose - This paper aims to assess all the Brazilian electric power transmission line auctions occurred between 1999 and 2017. Design/methodology/approach - A copula-based Roy/endogenous switching regression model is used. The suitability of this model is twofold: it takes into account the selection bias problem involving auctions data and it allows more flexibility in modeling the joint distribution between the unobserved components of the selection and outcome equations; thus, normal distribution assumptions are not needed. Findings - The main results suggest that stated-owned companies have the highest probability of winning an auction, and there is a non-competitive behavior among the players in the auction. The results also suggest some departure from joint normality in the data. Originality/value - The copula-based sample selection approach used in this paper is consistent under non-normality and allows one to address different types of nonlinearities in the data such as asymmetry and heavy tails.

Keywords: Electric power transmission; Auctions; Copulas methods; Roy/endogenous switching regression model; C15; C46; E52 (search for similar items in EconPapers)
Date: 2020
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