Economics at your fingertips  

Designing Electricity Auctions

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

Microeconomics from University Library of Munich, Germany

Abstract: Motivated by the new auction format introduced in the England and Wales electricity market, as well as the recent debate in California, we characterize bidding behavior and market outcomes in uniform and discriminatory electricity auctions. We find that uniform auctions result in higher average prices than discriminatory auctions, but the ranking in terms of productive efficiency is ambiguous. The comparative effects 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 firms are restricted to a finite number of bids.

Keywords: Market design; electricity; multi-unit auctions; regulatory reform (search for similar items in EconPapers)
JEL-codes: D44 L94 L11 L13 L51 (search for similar items in EconPapers)
Date: 2002-11-21, Revised 2004-01-29
Note: Type of Document - pdf; prepared on PC-TEX; pages: 37
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Journal Article: Designing electricity auctions (2006) Downloads
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:

Access Statistics for this paper

More papers in Microeconomics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().

Page updated 2019-02-11
Handle: RePEc:wpa:wuwpmi:0211017