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The Case for a Discriminatory Pricing Rule in Competitive Electricity Pools

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    Rights statement: © Anwar, A. (2004). The Case for a Discriminatory Pricing Rule in Competitive Electricity Pools. (ESE Discussion Papers). Edinburgh School of Economics, University of Edinburgh.

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http://ideas.repec.org/p/edn/esedps/39.html
Original languageEnglish
PublisherEdinburgh School of Economics, University of Edinburgh
Number of pages36
Publication statusPublished - Apr 2004

Publication series

NameESE Discussion Papers

Abstract

We present a multi-unit common value auction model with capacity constraints which ensure the participants face a residual market. We show that a discriminatory auction performs better than a uniform one when such constraints are present. We then look at a more explicit model of electricity pools and show that the preferred uniform pricing rule can lead to equilibria that are even worse than the basic model suggests. We show that a discriminatory auction would lead to relatively more competitive prices.

    Research areas

  • electricity pool, multi-unit auction

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