In the deregulated market environment

there exists a game relationship between the upstream fuel market and the downstream electricity producers. From the long-term point of view

this kind of game relationship reflects the development trend of each main market player and clarifying the relationship can provide some scientific support for drafting rational policies. The clarification process may be easy under the ideal conditions without any capacity constraints

while the game relationship will become very complicated with capacity constraints. A game theory based model is thus built to represent interactions between upstream fuel market and downstream electricity market

in which different generation technologies are taken into consideration. With the model

the impacts of fuel price on the strategy behaviors of generation groups are analyzed through mathematical analysis and simulations in order to understand the possible changes of strategy behaviors when there is a binding constraint on electricity production. The results show how market participants may choose their optimal strategies in response to the fuel price and their rivals' actions. Moreover

it is shown that a binding capacity will make the interactions between the fuel producers and the electricity producers more complicated

where the equilibrium will break down into multi-strategy equilibria.