Use of Long-term Auctions for Network Investment

Tanga McDaniel and Karsten Neuhoff ()

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Short-term auctions for access to entry terminals of the British gas-network appear to successfully allocate scarce resources and capture scarcity rent. Now long-term auctions are being introduced to guide future capacity expansion decisions. In our model the fraction of rights issued in the long-term auction turns out to be a crucial design parameter. Even a `hypothetically` optimal parameter choice can in general only satisfy one of three aims: Unbiased provision of capacity, full revelation of private information and minimisation of distortions from network effects. The results suggest that long-term auctions for transmission capacity are not necessarily preferable to regulatory approved capacity expansion.

Keywords: Auctions; Gas; Investment; Networks; Regulation (search for similar items in EconPapers)
JEL-codes: D44 D92 L5 L95 (search for similar items in EconPapers)
Pages: 32
Date: 2002-05
New Economics Papers: this item is included in nep-ene, nep-mic, nep-net and nep-reg
Note: CMI IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.econ.cam.ac.uk/electricity/publications/wp/ep04.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.econ.cam.ac.uk/electricity/publications/wp/ep04.pdf [301 Moved Permanently]--> https://www.econ.cam.ac.uk/electricity/publications/wp/ep04.pdf)

Related works:
Working Paper: Use of Long-term Auctions for Network Investment (2003)
Working Paper: Use of long-term auctions for network investment (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:0213

Access Statistics for this paper

More papers in Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge
Bibliographic data for series maintained by Jake Dyer ().