Auctions , collusion , market power , energy markets , reserve power , balancing power
Abstract:
We analyze a drastic price increase in the German auction market for reserve power, which
did not appear to be driven by increased costs. Studying the market structure and individual
bidding strategies, we find evidence for collusive behavior in an environment with repeated
auctions, pivotal suppliers and inelastic demand. The price increase can be traced back to an
abuse of the auction’s pay-as-bid mechanism by the two largest firms. In contrast to theoretical
findings, we show that pay-as-bid auctions do not necessarily reduce incentives for strategic
capacity withholding and collusive behavior, but can even increase them.
Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.
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