Does a Clean Development Mechanism Facilitate International Environmental Agreements?
23 Pages Posted: 4 Nov 2014
Date Written: November 3, 2014
When politicians negotiate in international climate conventions they may suffer from incomplete information about each other's preferences about reaching an agreement. As is known, this may cause failure to reach an efficient cooperative agreement. We study the role of the clean development mechanism (CDM) for the likelihood of such failure. The CDM has been introduced in the context of the Kyoto Protokol to allow countries to make efficiency enhancing use of cross-country low-cost mitigation opportunities. We use a simple bargaining framework to uncover why this mechanism may reduce the likelihood for reaching an efficient cooperative climate agreement.
Keywords: clean development mechanism, international climate agreements, bargaining, incomplete information
JEL Classification: Q54, Q58, F53, H41
Suggested Citation: Suggested Citation