Literature review. Pricing rule alternatives for the European day-ahead market
This literature review delves into the intricate realm of pricing rules in the day-ahead electricity market, spurred by a notable surge in 2022 electricity prices. Employing a comparative analysis of uniform pricing (UP), discriminatory pricing (DP), and the Vickrey–Clarke–Groves (VCG) pricing rule...
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| Language: | English |
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AGH UNIVERSITY PRESS
2024-04-01
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| Series: | Managerial Economics |
| Online Access: | https://journals.agh.edu.pl/manage/article/view/6223 |
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| author | Felix Weißensteiner |
| author_facet | Felix Weißensteiner |
| author_sort | Felix Weißensteiner |
| collection | DOAJ |
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This literature review delves into the intricate realm of pricing rules in the day-ahead electricity market, spurred by a notable surge in 2022 electricity prices. Employing a comparative analysis of uniform pricing (UP), discriminatory pricing (DP), and the Vickrey–Clarke–Groves (VCG) pricing rule, the study navigates the complexities of these mechanisms. The evaluation unveils contrasting perspectives: the political push for consumer-friendly low prices versus the efficiency aspiration for a self-regulating market. DP, minimizing average prices but increasing volatility, and VCG, excelling in productive efficiency, are pitted against UP, the prevailing yet imperfect norm. The findings underscore the nuances of each rule; DP leads to reduced average prices and heightened volatility, while VCG ensures superior productive efficiency. Despite UP’s simplicity, it prompts inefficiencies and political costs. These insights illuminate the pivotal choice faced by policymakers, balancing efficiency, fairness, and market sustainability.
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| format | Article |
| id | doaj-art-4d9652f6a3cb40d9b8e09e0b45a28b83 |
| institution | DOAJ |
| issn | 1898-1143 2353-3617 |
| language | English |
| publishDate | 2024-04-01 |
| publisher | AGH UNIVERSITY PRESS |
| record_format | Article |
| series | Managerial Economics |
| spelling | doaj-art-4d9652f6a3cb40d9b8e09e0b45a28b832025-08-20T02:52:09ZengAGH UNIVERSITY PRESSManagerial Economics1898-11432353-36172024-04-0124210.7494/manage.2023.24.2.187Literature review. Pricing rule alternatives for the European day-ahead marketFelix Weißensteiner0University of Graz, Austria This literature review delves into the intricate realm of pricing rules in the day-ahead electricity market, spurred by a notable surge in 2022 electricity prices. Employing a comparative analysis of uniform pricing (UP), discriminatory pricing (DP), and the Vickrey–Clarke–Groves (VCG) pricing rule, the study navigates the complexities of these mechanisms. The evaluation unveils contrasting perspectives: the political push for consumer-friendly low prices versus the efficiency aspiration for a self-regulating market. DP, minimizing average prices but increasing volatility, and VCG, excelling in productive efficiency, are pitted against UP, the prevailing yet imperfect norm. The findings underscore the nuances of each rule; DP leads to reduced average prices and heightened volatility, while VCG ensures superior productive efficiency. Despite UP’s simplicity, it prompts inefficiencies and political costs. These insights illuminate the pivotal choice faced by policymakers, balancing efficiency, fairness, and market sustainability. https://journals.agh.edu.pl/manage/article/view/6223 |
| spellingShingle | Felix Weißensteiner Literature review. Pricing rule alternatives for the European day-ahead market Managerial Economics |
| title | Literature review. Pricing rule alternatives for the European day-ahead market |
| title_full | Literature review. Pricing rule alternatives for the European day-ahead market |
| title_fullStr | Literature review. Pricing rule alternatives for the European day-ahead market |
| title_full_unstemmed | Literature review. Pricing rule alternatives for the European day-ahead market |
| title_short | Literature review. Pricing rule alternatives for the European day-ahead market |
| title_sort | literature review pricing rule alternatives for the european day ahead market |
| url | https://journals.agh.edu.pl/manage/article/view/6223 |
| work_keys_str_mv | AT felixweißensteiner literaturereviewpricingrulealternativesfortheeuropeandayaheadmarket |