Use of Long-term Auctions for Network Investment

Arbeitspapier

Short-term auctions for access to entry terminals of the British gas-network appear to successfully allocate scarce resources and capture scarcity rent. Now long-term auctions are being introduced to guide future capacity expansion decisions. In our model the fraction of rights issued in the long-term auction turns out to be a crucial design parameter. Even a “hypothetically” optimal parameter choice can in general only satisfy one of three aims: unbiased provision of capacity, full revelation of private information and minimisation of distortions from network effects. The results suggest that long-term auctions for transmission capacity are not necessarily preferable to regulatory approved capacity expansion.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 29.2003

Classification and Topics

• Classification: Wirtschaft ; Auctions ; Gas Utilities; Pipelines; Water Utilities
• Subject: Auctions ; gas ; investment ; networks ; regulation ; Gasversorgung ; Netzregulierung ; Auktion ; Regulierung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): McDaniel, Tanga ; Neuhoff, Karsten
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/118059
• Last update: 10.03.2025, 11:41 AM CET