Thomas Greve, University of Copenhagen: "Essays in Mechanism Design"

"Essays in Mechanism Design"


This thesis consists of five papers addressing different issues within the area of mechanism design. The first chapter examines two different ways of regulating a market – one where only a single firm is operating, being a regulated monopoly, and another one with two firms in the market, operating under regulated competition. We consider an industry with a technology admitting increasing returns to scale and a no-subsidy policy. We investigate the welfare effects of the two alternative regimes.

The second paper studies the bidding behavior in a multi-dimensional procurement auction where both the principal and the agents have private information. The interest here is the consequences of having a principal that do not show its preferences. Absent these preferences from the principal, the agents will not know how much to bid in order to win the contract.

The third chapter is a literature review on the current theory and experience of auctions and serves as a background for the last two chapters. In the fourth chapter, we propose an auction design that can increase the possibility to secure funding to finance infrastructure investments. Specifically, we look at the market for offshore transmission assets, but the auction can easily be used in other areas. In the last chapter, we propose an auction design where bidders might propose own suggested/different offshore (and associated onshore) transmission network configurations and where bidding for packages transmission assets is a possibility.