The impact of ex-ante versus ex-post CDM baselines on a monopoly firm

J. Akita, H. Imai, H. Niizawa

Research output: Chapter in Book/Report/Conference proceedingConference contribution

1 Citation (Scopus)

Abstract

Clean Development Mechanism (CDM) baseline setting methods may be broadly classified as ex ante or ex post. Ex post baselines consider information available before and after implementation of the project. However, the incorporation of ex post information inadvertently runs the risk of distorting the incentives of project participants. Accordingly, when the scale of output is endogenously determined, an ex post baseline tends to boost output. We show that this may increase total emissions, despite the reduction in emissions per output. With an ex ante baseline, output is suppressed, bringing about the benefit of a reduction in total emissions. However, lower output implies a decrease in consumer and producer surplus. Consequently, total social welfare may actually deteriorate because of the CDM.

Original languageEnglish
Title of host publication18th World IMACS Congress and MODSIM 2009 - International Congress on Modelling and Simulation
Subtitle of host publicationInterfacing Modelling and Simulation with Mathematical and Computational Sciences, Proceedings
EditorsR.S. Anderssen, R.D. Braddock, L.T.H. Newham
PublisherModelling and Simulation Society of Australia and New Zealand Inc. (MSSANZ)
Pages2178-2184
Number of pages7
ISBN (Electronic)9780975840078
Publication statusPublished - 2009 Jan 1
Event18th World IMACS Congress and International Congress on Modelling and Simulation: Interfacing Modelling and Simulation with Mathematical and Computational Sciences, MODSIM 2009 - Cairns, Australia
Duration: 2009 Jul 132009 Jul 17

Publication series

Name18th World IMACS Congress and MODSIM 2009 - International Congress on Modelling and Simulation: Interfacing Modelling and Simulation with Mathematical and Computational Sciences, Proceedings

Conference

Conference18th World IMACS Congress and International Congress on Modelling and Simulation: Interfacing Modelling and Simulation with Mathematical and Computational Sciences, MODSIM 2009
Country/TerritoryAustralia
CityCairns
Period09/7/1309/7/17

Keywords

  • Baseline
  • Clean Development Mechanism (CDM)
  • Leakage
  • Monopoly
  • Welfare

ASJC Scopus subject areas

  • Modelling and Simulation

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