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Publication Detailed Description
Determining the optimal length of regulatory guarantee: a length‐of‐contract auction
Journal Title
Economic Journal
Year (definitive publication)
2017
Language
English
Country
United Kingdom
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Abstract
We present an auction design to be used in the area of procurement that allows the length of the regulatory funding period to be determined via an auction. It allows bidders to submit bids against a payment for periods of varying lengths, say 25 and 30 years, instead of a fixed 20‐year contract. This can be desirable for securing more favourable terms in financial markets. It yields efficiency and delivers the optimal length of contract, defined as where social value is maximised. The auction is applicable to any infrastructure investment such as energy, transportation or any area that uses contracts.
Acknowledgements
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Keywords
Procurement,Mechanism design
Fields of Science and Technology Classification
- Economics and Business - Social Sciences
Funding Records
| Funding Reference | Funding Entity |
|---|---|
| EP/I031650/1 | EPSRC Autonomic Power System |
