Electricity capacity markets work in tandem with electricity energy markets to ensure that investors build adequate capacity in line with consumer preferences for reliability. The need for a capacity market stems from several market failures. One particularly notorious problem of electricity...

The most efficient global climate policy is to price carbon. The Kyoto-Copenhagen agenda was intended to do this with a system of international cap and trade. We view these negotiations as a game in which countries choose their quantity targets based on self interest. Like the analogous...

A forward reliability market is presented. The market coordinates new entry through the forward procurement of reliability options--physical capacity bundled with a financial option to supply energy above a strike price. The market assures adequate generating resources and prices capacity from...