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...

Climate mitigation is largely done through investments in low-carbon capital that will have long-lasting effects on emissions. In a model that represents explicitly low-carbon capital accumulation, optimal marginal investment costs differ across sectors. They are equal to the value of avoided...