Multi-Agent Models for Consumer Choice and Retailer Strategies in the Competitive Electricity Market

The benefit to end-users of electricity, mainly in terms of low prices, is strictly related to the interaction among the consumers themselves and retailers. The literature on retail competition has highlighted possible distortions in market outcomes due to unresponsive demand and boundedly rational consumers. Hence, a model appropriate to represent this aspect of the market is needed. The paper proposes a general model of the interaction among retailers and consumers in the electricity market based on the theory of multi-agent systems. The model incorporates different assumptions concerning the behavior of the players that corresponds to different levels of interaction in determining the market outcomes. The model is validated interpretively by the results provided in terms of Game Theory equilibrium. The results of an extensive set of simulations on a population of 1,000 consumers is presented and discussed.