Bidding in an electricity pay-as-bid auction

Giulio Federico () and David Rahman ()
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Giulio Federico: Nuffield College, Oxford, http://www.nuff.ox.ac.uk/

No 2001-W5, Economics Papers from Economics Group, Nuffield College, University of Oxford

Abstract: One of the main elements of the current reform of electricty trading in the UK is the change from a uniform price auction in the wholesale market to discriminatory pricing. We analyse this change under two polar market structures (perfectly competitive and monopolistic supply), with demand uncertainty. We find that under perfect competition there is a trade-off between efficiency and average prices between the two auction rules. We also establish that a move from uniform to discriminatory pricing under monopoly conditions has a negative impact on profits and output (weakly), and ambiguous implications for prices and welfare.

Keywords: Multi-Unit Auctions; Price discrimination; Electricity (search for similar items in EconPapers)
JEL-codes: D41 D42 D44 L94 (search for similar items in EconPapers)
Pages: 39pages
Date: 2000-04-01, Revised 2001-04-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Bidding in an Electricity Pay-as-Bid Auction (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:0105

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