An Aproximation of the Optimality and Efficiency Problems of the Colombian Electricity Industry (Una Aproximación al Problema de Optimalidad y Eficiencia en el Sector Eléctrico Colombiano) (Spanish)

60 Pages Posted: 10 Oct 2009

See all articles by Miguel Andrés Espinosa

Miguel Andrés Espinosa

Universidad de los Andes, Colombia - Department of Economics

Date Written: February 8, 2009

Abstract

The paper proposes a theoretical model for understanding the functioning of the spot energy market in Colombia. In particular, it analysed the optimal performance for the three best-known types of multiunit auctions, Vickrey, discriminatory and uniform. The modelling, being a game of incomplete information includes features of the Colombian energy industry, such as reconciliations, private contracts and the uncertainty of the demand. The empirical analysis describes the sector in terms of efficiency and optimality. The efficiency’s literature referers to the condition in which winners of the auction are the agents with lower costs. Evidence of adverse effects have been found from the compensation mechanism for negative reconciliations in the perios of study (2000-2007). On the other hand, a mechanism is called optimal if it is the mechanism that leads to lower spending. The spending comparisons show that under a discriminatory auction could lead to a lower spending than the uniform one.

Keywords: Multi-unit auctions, Colombian electricity industry, structural econometrics.

JEL Classification: D44, C14, C15, C23.

Suggested Citation

Espinosa, Miguel Andrés, An Aproximation of the Optimality and Efficiency Problems of the Colombian Electricity Industry (Una Aproximación al Problema de Optimalidad y Eficiencia en el Sector Eléctrico Colombiano) (Spanish) (February 8, 2009). Documento CEDE No. 2009-07, Available at SSRN: https://ssrn.com/abstract=1485840 or http://dx.doi.org/10.2139/ssrn.1485840

Miguel Andrés Espinosa (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

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