Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/73044
Authors: 
Heim, Sven
Goetz, Georg
Year of Publication: 
2013
Series/Report no.: 
Joint Discussion Paper Series in Economics 24-2013
Abstract: 
We analyze a drastic price increase in the German auction market for reserve power, which did not appear to be driven by increased costs. Studying the market structure and individual bidding strategies, we find evidence for collusive behavior in an environment with repeated auctions, pivotal suppliers and inelastic demand. The price increase can be traced back to an abuse of the auction's pay-as-bid mechanism by the two largest firms. In contrast to theoretical findings, we show that pay-as-bid auctions do not necessarily reduce incentives for strategic capacity withholding and collusive behavior, but can even increase them.
Subjects: 
Auctions
Collusion
Market Power
Energy Markets
Reserve Power
Balancing Power
JEL: 
D43
D44
D47
L11
L13
Document Type: 
Working Paper

Files in This Item:
File
Size
431.45 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.