This paper investigates strategic capacity choices in electricity markets comprised of heterogeneous firms. Long term strategic investments are analyzed assuming that the wholesale market is competitive. There are two technologies available to produce electricity; both are efficient and used at...

This article analyzes the effect of risk and risk-aversion on the long-term equilibrium technology mix in an electricity market. It develops a model where firms can invest in baseload plants with a fixed variable cost and peak plants with a random variable cost, and demand for electricity varies...

It is widely accepted that one of the most important characteristics of an effective pollution control policy is to provide firms with credible incentives to make long-run investments in R&D that can drastically reduce pollution. Recognizing that a government may be tempted to revise its policy...

Borrowing from the bundling literature, the paper presents a novel model of vertical and horizontal differentiation applied to transport decisions: households differ in their preferences for transportation modes — cars vs public transport — and in the amount of travel. Using few observables,...