ABSTRACT
This chapter investigates how alternative clean development mechanism (CDM) baseline-setting methods perform when applied to a CDM project undertaken by a profit-maximizing firm in an imperfectly competitive industry. A Cournot oligopoly game model is used to analyze how CDM baselines affect output scale choice by the firm engaging in the CDM project as well as other firms in the industry. The theoretical analysis is applied and illustrated using a numerical example inspired by an actual CDM project currently under way.
