Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/129652
Authors: 
Blazquez de Paz, Mario
Year of Publication: 
2015
Series/Report no.: 
IFN Working Paper 1098
Abstract: 
Electricity markets are becoming more integrated around the world. However, the knowledge of the effects of different auction formats on suppliers' strategies in the presence of transmission constraints and transmission costs is still very limited. In this paper, I analyze the performance of uniform and discriminatory price auctions in the presence of transmission constraints and transmission costs. When the transmission capacity is binding, the discriminatory price auction could outperform the uniform price auction, minimizing the equilibrium price and the transmission costs. Moreover, when the transmission capacity is binding, an increase in transmission costs could be pro-competitive when the auction is discriminatory, but not when the auction is uniform.
Subjects: 
electricity auctions
transmission constraint
transmission costs
market design
JEL: 
D43
D44
L13
L94
Document Type: 
Working Paper

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