Multidimensional Auctions for Public Energy Efficiency Projects: Evidence from Japanese Esco Market

Multidimensional Auctions for Public Energy Efficiency Projects: Evidence from Japanese Esco Market Competitive bidding is an important policy tool for governments to procure goods and services at the lowest possible cost in the market. Under the traditional public procurement system, however, it is difficult to purchase a highly customized object, such as energy efficiency services, because not only prices but also other nonmonetary aspects need to be taken into account. Multidimensional auctions are useful in such cases. The paper examines the cluster of characteristics of the winning bids of multidimensional auctions for public energy service company (ESCO) projects in Japan. As theory predicts, it is found that the competition effect is significant. Other institutional aspects—such as preannouncement of an energy savings target—are also found important to promote energy efficiency. The results also indicate that the public sector should absorb the regulatory and institutional risks that are related to ESCO projects. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Multidimensional Auctions for Public Energy Efficiency Projects: Evidence from Japanese Esco Market

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Publisher
Springer Journals
Copyright
Copyright © 2016 by Springer Science+Business Media New York
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-016-9510-7
Publisher site
See Article on Publisher Site

Abstract

Competitive bidding is an important policy tool for governments to procure goods and services at the lowest possible cost in the market. Under the traditional public procurement system, however, it is difficult to purchase a highly customized object, such as energy efficiency services, because not only prices but also other nonmonetary aspects need to be taken into account. Multidimensional auctions are useful in such cases. The paper examines the cluster of characteristics of the winning bids of multidimensional auctions for public energy service company (ESCO) projects in Japan. As theory predicts, it is found that the competition effect is significant. Other institutional aspects—such as preannouncement of an energy savings target—are also found important to promote energy efficiency. The results also indicate that the public sector should absorb the regulatory and institutional risks that are related to ESCO projects.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Mar 17, 2016

References

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