Agent-based analysis of technological diversification and specialization in electricity markets

A model-based analysis of technological market structure evolution in electricity markets is developed through the development of a power plant trading game that, via computational learning, simulates how players coordinate their behaviour in buying and selling power generation assets.

Abstract

This paper develops a model-based analysis of technological market structure evolution in electricity markets. This is done through the development of a power plant trading game that, via computational learning, simulates how players coordinate their behaviour in buying and selling power generation assets. In particular, we look at the question of how market performance depends upon the different technological types of plant owned by the generators, and whether, through the strategic adaptation of their power plant portfolios, there is a tendency for the market to evolve into concentrations of specialized or diversified companies.