Universität zu Köln

Richter, Jan and Viehmann, Johannes (2014). The value of information in explicit cross-border capacity auction regimes in electricity markets. Energy Policy, 70. S. 74 - 85. OXFORD: ELSEVIER SCI LTD. ISSN 1873-6777

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Abstract

We study two electricity markets connected by a fixed amount of cross-border capacity. The total amount of capacity is known to all electricity traders and allocated via an auction. The capacity allocated to each bidder in the auction remains private information. We assume that traders are faced with a demand function reflecting the relationship between electricity transmitted between the markets and the spot price difference. Therefore, traders act like Bayesian-Cournot oligopolists in exercising their transmission rights when presented with incomplete information about the competitors' capacities. Our analysis breaks down the welfare effect into three different components: Cournot behavior, capacity constraints, and incomplete information. We find that social welfare increases with the level of information with which traders are endowed. (C) 2014 Elsevier Ltd. All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Richter, Jan UNSPECIFIED UNSPECIFIED UNSPECIFIED Viehmann, Johannes UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-435518
DOI:	10.1016/j.enpol.2014.03.023
Journal or Publication Title:	Energy Policy
Volume:	70
Page Range:	S. 74 - 85
Date:	2014
Publisher:	ELSEVIER SCI LTD
Place of Publication:	OXFORD
ISSN:	1873-6777
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language Economics; Energy & Fuels; Environmental Sciences; Environmental Studies Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/43551