{"title":"Determining the Optimal Length of Regulatory Guarantee: A Length-of-contract Auction","authors":"Thomas Greve, Michael G. Pollitt","doi":"10.1111/ecoj.12405","DOIUrl":null,"url":null,"abstract":"<p>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.</p>","PeriodicalId":48448,"journal":{"name":"Economic Journal","volume":"127 605","pages":"F325-F333"},"PeriodicalIF":3.8000,"publicationDate":"2017-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1111/ecoj.12405","citationCount":"5","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economic Journal","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/ecoj.12405","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 5
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.
期刊介绍：
The Economic Journal is the Royal Economic Society''s flagship title, and is one of the founding journals of modern economics. Over the past 125 years the journal has provided a platform for high quality and imaginative economic research, earning a worldwide reputation excellence as a general journal publishing papers in all fields of economics for a broad international readership. It is invaluable to anyone with an active interest in economic issues and is a key source for professional economists in higher education, business, government and the financial sector who want to keep abreast of current thinking in economics.
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