Forward contracts play an important role for marketpower mitigation and risk hedging in electricity markets. In thispaper, a two-settlement electricity market including a forwardmarket and a spot market is formulated as a two-stage game. Thelinear supply function equilibrium (LSFE) model and Cournotmodel are used to model strategic bidding for the spot market,while the forward market is modeled by Cournot model. A coevolutionarygenetic algorithm (CGA) is employed to determinethe market equilibrium. The paper then examines the questionwhether generation companies (GenCos) would voluntarily enterforward markets due to economic inspiration and studies theoreticallyand numerically the factors which can affect the biddingbehaviors of GenCos. The effectiveness of CGA in determiningthe market equilibrium is investigated and demonstrated basedon two test examples. The studies show that GenCos’ decisions onthe participation in forward markets depend significantly on thetype of competition that they have in the spot market. Moreover,GenCos’ bidding behaviors in the forward market can be affectedby their cost parameters and the slope of system demand functionsignificantly.