Endogenous instability: modeling behavioral, structural, and environmental drivers in the coal-power supply chain

The stability of the coal-power supply chain is vital to energy security but often undermined by overlooked behavioral and structural forces. This paper develops a discrete-time agent-based simulation model incorporating three sector-specific features: the structural feature (capacity inertia of coal producers), the environmental feature (seasonality in electricity demand), and the behavioral feature (expectation-driven ordering of power plants). UsingLatin-square experimental design and ANOVA, we analyze emergent dynamics. First, we find that power plants’ collective price expectations act as an endogenous amplifier, significantly increasing market coal price volatility. Second, abundant production capacity is inversely related to supply chain stability, causing more frequent shutdowns for coal producers and power plants. Third, seasonal demand swings interact with these behavioral and structural factors to trigger power plants’ suboptimal procurement and inventory strategies. These findings contribute to behavioral operations management theory by demonstrating how boundedly rational agents generate systemic instability. Furthermore, our findings provide novel, simulation-based evidence that de-capacity policies in the coal sector can be a critical lever for enhancing market stability and ensuring a more resilient energy supply.