The INFRASTRATEGO game: An evaluation of strategic behavior and regulatory regimes in a liberalizing electricity market

Abstract

The authors used the INFRASTRATEGO simulation game to examine strategic behavior in a liberalizing electricity market and the effectiveness of different regulatory regimes in dealing with this strategic behavior. The game simulates the Dutch electricity market in the years 2002 to 2006. The game was played eight times with about 400 players, both professionals and students. Two regulatory regimes defined by (a) the policy-making model and (b) the regulation by negotiation model were evaluated. The authors found several patterns of strategic behavior, such as regulatory capture, sometimes with rather disturbing effects with regard to the settlement of rates and long-term capacity planning.