The paper, "A Model-Based Analysis of the AggregateEU Mechanism: Implications of Overbidding and Non-Commitment," was written together with Borbála Takácsné Tóth and Péter Kotek (Corvinus University of Budapest, REKK), László Á. Kóczy (HUN-REN Centre for Economic and Regional Studies / Budapest University of Technology and Economics) and Anne Neumann (Norwegian University of Science and Technology).
What is AggregateEU?
Launched by the European Commission at the end of 2022 in response to the European energy crisis, AggregateEU is a centralised platform that pools EU buyers' natural gas demand and matches it with suppliers' offers to strengthen buyers' collective bargaining power after the sharp reduction in Russian pipeline gas supplies. Crucially, a match on the platform does not create a binding contract — participants remain free to walk away afterwards. This non-binding character has earned the mechanism the informal nickname "the Tinder of the European gas market."
Why "overbidding" matters
Because matches are non-binding, participants have an incentive to submit demand or supply bids well above what they actually need or can deliver (a behaviour the authors call overbidding) either to guarantee enough potential partners or to "cherry-pick" the best offers among several matches. Using a game-theoretic and quantitative modelling framework, the research team shows that the effect of overbidding on market efficiency is genuinely ambiguous: depending on the underlying parameters, it can help buyers and sellers who would otherwise never be matched find each other, but it can equally lead to highly inefficient outcomes, especially when overbidding coincides with poor coordination across the multiple delivery points used in the EU gas market.
Drawing on these findings, the authors propose several possible remedies for policymakers, including allowing more flexible ("convex") bids, limiting the extent of overbidding, or giving up part of the platform's non-binding nature. They also suggest that a future mechanism able to coordinate bids across multiple delivery points simultaneously could make joint gas purchasing significantly more efficient.
The study is one of the first academic, model-based evaluations of AggregateEU's mechanism design, an area where, as the authors note, independent research has so far been scarce because of limited public data on concluded contracts.
Read the full article HERE. (open access)
