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CAWM Discussion Papers, Universität Münster >
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http://hdl.handle.net/10419/51361
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| Title: | | A more efficient procurement mechanism for reserver capacity in the German market for balancing power  |
| Authors: | | Flinkerbusch, Kai |
| Issue Date: | | 2011 |
| Series/Report no.: | | CAWM discussion paper / Centrum für Angewandte Wirtschaftsforschung Münster 52 |
| Abstract: | | From auction theory we know that multi-unit, pay-as-bid auctions in general lead to bid shading and thus to an inefficient allocation. This result is supported by historical data from the German market for balancing power, which show that bidders bid well above their actual costs. In contrast to the pay-as-bid auction, the Vickrey auction has the dominant strategy property and bidders reveal their true opportunity cost. Consequently, the Vickrey auction allocates efficiently. In this article we show how this auction format can facilitate an efficient capacity procurement process in the German reserve market. |
| Subjects: | | Electricity market balancing power uniform-price auction pay-as-bid auction |
| JEL: | | D44 N74 L11 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CAWM Discussion Papers, Universität Münster
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