Theoretical analysis of economic mechanisms in international environmental agreement

Kyoto Protocol is prominent in its use of market related mechanisms to assist nations to achieve their emission targets. Not only emission trading, project based mechanisms are newly introduced and currently thriving, although many problems are pointed out at the same time (e.g. see [5]). Currently, in relation with the post Kyoto (or post 2020) scheme, many proposals on new mechanisms are under investigation at the UNFCCC etc., and these mechanisms are supposed to play important roles in the international framework to coop with climate change, as well as the future course of the development of environmental technology. In this paper, we shall investigate how the detailed feature in the design of these mechanisms affects the economic incentives and the future of framework for international cooperation in combating environmental problems, especially in relation with the bilateral mechanism. Based on this observation, we make an appraisal of its effect on the international negotiation too.