A multiple-unit, multiple-period auction in the British electricity spot market

This paper examines the electricity pool in England and Wales. The approach followed in this paper builds on the auction approach of Von der Fehr and Harbord (Von der Fehr, N.H.M., Harbord, D., 1993. Spot market competition in the UK electricity industry. Econ. J. 103, 531-546), but adds realism by allowing explicitly for multiple-unit firms and multiple periods. In a formal setting, a bidding range will be derived, by characterizing the polar cases. The more interesting lower bidding rule will be characterized in detail, providing insights in the performance of the British electricity pool. Four aspects; are examined more closely: (1) the mark-up; (2) the number of firms; (3) the auction frequency (bidding flexibility); and (4) load-profile competition. (C) 2001 Elsevier Science B.V. All rights reserved. JEL classifications: D44; L94; L11.