Essays on applied auction problems in electric generation and in neighboring jurisdictions

Thesis/Dissertation · Fri Jan 01 04:00:00 EST 1993

OSTI ID:7245057

Eastman-Perl, K A

This work consists of three essays. The first essay, [open quotes]Contract Selection and Performance in Competitive Bidding for Electric Generation,[close quotes], studies the new practice of competitive bidding among third parties to supply utilities with electric generating capacity. The other two essays, entitled [open quotes]First Price Auctions in Neighboring Jurisdictions,[close quotes] and [open quotes]Second Price Auctions in Neighboring Jurisdictions,[close quotes] study the general problem of auctions when there are several auctioneers that can observe each other and can use information from these observations strategically. The first essay notes that competitive bidding programs for electric generation are really auctions of long-term contracts between utility and third parties. Bids and contracts from Maine were studied. Since Maine has a wealth of alternative fuels, such as wood and hydroelectric, the applicability of this study is limited to states with significant alternative fuel resources. The second and third essays consider auctions in neighboring jurisdictions. One concerns first-price auctions (low bid, wins, and is paid its bid), and the other concerns second-price auctions (low bid wins, and is paid the second lowest bid). One town initially holds an auction, the results of which are public information. Another town can use this public information to negotiate with the winner of the initial auction. Firms always bid higher in an initial first-price auction than they would if a neighboring town were not present. In equilibrium, firms are no worse off than they would be if both towns acted independently, and the negotiating town benefits at the expense of the town initially auctioning. In second-price auctions, the incentive compatibility property is preserved if relatively lower cost firms bid in the initial auction. The town initially conducting the auction is unaffected, and the negotiating town benefits at the firm's expense.

• Research Organization: Princeton Univ., NJ (United States)
• OSTI ID: 7245057
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
290201 -- Energy Planning & Policy-- Economics-- (1992-)
296000* -- Energy Planning & Policy-- Electric Power
BIDS
COMPETITION
ECONOMIC ANALYSIS
ECONOMICS
ELECTRIC POWER
ELECTRIC UTILITIES
POWER
POWER GENERATION
PUBLIC POLICY
PUBLIC UTILITIES