The optical properties of CdSe nanostructures grown by migration-enhanced e
pitaxy of CdSe on ZnSe are studied by time-, energy-, and temperature-depen
dent photoluminescence and excitation spectroscopy, as well as by polarizat
ion-dependent four-wave mixing and two-photon absorption experiments. The n
anostructures consist of a coherently strained Zn1-xCdxSe/ZnSe quantum well
with embedded islands of higher Cd content with sizes of a few nanometer d
ue to strain-induced CdSe accumulation. The local increase in CdSe concentr
ation results in a strong localization of the excitonic wave function, in a
n increase in radiative lifetime, and a decrease of the dephasing rate. Loc
al LO-phonon modes caused by the strong modulation of the Cd concentration
profile are found in phonon-assisted relaxation processes. Confined biexcit
ons with large binding energies between 20 and 24 meV are observed, indicat
ing the important role of biexcitons even at room temperature.