Robust market design for power industry deregulation by simulations

This paper proposes one concept of robust market design subject to stakeholders' strategic behavior. The key to robust design is the application of computer simulations, which is used to as a tool to avoid detectable loopholes in the market. An example illustrates the method. Computer simulation not only provides much information about the dynamics of economic agents' interaction, but also allows modeling of aggregate market outcomes from heterogeneous individual behavior. With this method, the policymakers have a better opportunity to communicate with others and to understand the possible consequences of different decisions under different optional policies and market conditions. (C) 2010 Elsevier B.V. All rights reserved.