Auction design for gas pipeline transportation capacity–The case of Nabucco and its open season

Auction design for gas pipeline transportation capacity. Empirical market‐survey of Nabucco pipeline project auction as input data. Testing of three different allocation mechanisms: (i) NPV allocation; (ii) pro rata allocation; and (iii) optimization. Results show a trade‐off between revenue optimization and fair allocation. Allocation per optimization is the favorable auction design when revenue maximization is more important than fair allocation. On the other hand, pro rata allocation is the auction design to be chosen when fairness of allocation is considered most central.