TY - JOUR
T1 - Bidding in an Electricity Pay-as-Bid Auction
AU - Federico, Giulio
AU - Rahman, David
PY - 2003/9
Y1 - 2003/9
N2 - One of the main elements of the recent reform of electricity trading in the United Kingdom is the change from a uniform price auction in the wholesale market to discriminatory pricing. We analyze 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 consumer surplus 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), a positive impact on consumer surplus, and ambiguous implications for welfare and average prices.
AB - One of the main elements of the recent reform of electricity trading in the United Kingdom is the change from a uniform price auction in the wholesale market to discriminatory pricing. We analyze 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 consumer surplus 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), a positive impact on consumer surplus, and ambiguous implications for welfare and average prices.
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U2 - 10.1023/A:1024738128115
DO - 10.1023/A:1024738128115
M3 - Article
AN - SCOPUS:0037829616
SN - 0922-680X
VL - 24
SP - 175
EP - 211
JO - Journal of Regulatory Economics
JF - Journal of Regulatory Economics
IS - 2
ER -