Investigating pure bundling in Japan’s electricity procurement auctions

Ayako Suzuki*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


This study investigates the effect of bundling contracts on electricity procurement auctions in Tokyo. We conduct structural estimations that include elements of asymmetry between the incumbent and the new entrant firms and that endogenize the participation of bidders, and investigate the effect of bundling on the costs of firms, competition between the incumbent and the new firms, and auction outcomes. The results first confirm that bundling contracts raises the cost of firms, increases the asymmetry between incumbent and new firms and helps exclude new firms from auctions. We find the negative effect increasing the costs of firms is somewhat mitigated by a larger scale of bundling, but that the negative effect on participation is scarcely offset by scale. The payment of the auctioneer may decline if bundling results in a large-sized auction, but the profit of the winner is always found to be lower in bundled auctions, presumably because firms bid more aggressively owing to the smaller dispersion of the opponents’ cost distributions.

Original languageEnglish
Article number1622
Issue number14
Publication statusPublished - 2021 Jul 2


  • Bundling
  • Electricity
  • Procurement auction

ASJC Scopus subject areas

  • Mathematics(all)


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