|Title:||Use of Long-term Auctions for Network Investment|
|Abstract:||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.|
|Appears in Collections:||Cambridge Working Papers in Economics|
Files in This Item:
|Additional resources for this item|
|search for alternative versions in eresources@cambridge|
|retrieve citation metadata in EndNote format|
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.