Multidimensional Auctions for Public Energy Efficiency Projects : Evidence from the Japanese ESCO Market
Competitive bidding is an important policy tool to procure goods and services from the market at the lowest possible cost. Under traditional public procurement systems, however, it may be difficult to purchase highly customized objects, such as ene...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/06/17874375/multidimensional-auctions-public-energy-efficiency-projects-evidence-japanese-esco-market http://hdl.handle.net/10986/15845 |
| Summary: | Competitive bidding is an important
policy tool to procure goods and services from the market at
the lowest possible cost. Under traditional public
procurement systems, however, it may be difficult to
purchase highly customized objects, such as energy
efficiency services. This is because not only prices but
also other nonmonetary aspects need to be taken into
account. Multidimensional auctions are often used to
evaluate multidimensional bids. This paper examines the
bidding strategy in multidimensional auctions, using data
from public energy service company projects in Japan. It
shows that multidimensional auctions work well, as theory
predicts. The competition effect is significant. In
addition, strategic information disclosure, including
walk-through and preannouncement of reserve prices, can also
promote energy savings and investment. Risk sharing
arrangements are critical in the energy service company
market. In particular, the public sector should take
regulatory risk. |
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