First of all, the research will evaluate different market models featuring an Exchange, with the aim of providing useful indications to the bodies (Market Operator, GRTN [the Italian national transmission grid operator], Ministry of Productive Activities) which are required to define the electricity market operating rules underlying these models. Once the rules have been established and the market is operating, results will be assessed in order to identify any critical elements in the model adopted, also with reference to negative experiences recently occurred in some foreign markets (e.g. in California). The second goal of the project concerns the evaluation, by means of simulation tools, of energy prices on the spot market, and the estimation of the possible influence on such prices resulting from the exercise of market power by generation companies. This is a major problem in the field of electric generation, which can be frequently and realistically associated with an oligopolistic market scenario, at least in the early stages of the liberalization process. In order to provide accurate answers, the simulator allows for the representation of the electrical system with a level of detail (e.g., inclusion of network constraints) such that the market response can be evaluated under the most varied assumptions of market participants’ behavior. The research will then address the problem of price volatility in the spot market and the direct or indirect causes of this phenomenon. First, the analysis will consider the historical trend of energy prices in the main liberalized markets of other countries, then the focus will shift to the Italian market. Due to price volatility, market participants have to adopt an effective risk management policy. Therefore we will carry out an investigation on ut techniques