In most developing and emerging economies competition and not regulation is used to\r\ndetermine prices at the wholesale electricity markets. But prices are not as low as it was\r\noriginally expected. Additionally, there are shortages of supply and a lack of investment in\r\ninfrastructure. It seems that the competitive process does not provide adequate incentives to\r\nresolve these problems. To get a better understanding of the real functioning of these markets,\r\nan in-class simulation is developed using fictitious but close-to-reality data. After having\r\nexplained thoroughly the experience with the restructuring of the electricity industry and the\r\ntheoretical underpinnings that justify the reforms of the sector, students take the role of\r\ngenerators and are asked to participate in a simulation. They develop winning strategies during\r\nthe bidding process and they easily grasp the gist of competitive industries by developing\r\nintuition in the preparation of bids under uniform auction markets.
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