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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. [ABSTRACT FROM AUTHOR]

A two stage dynamic model of climate change negotiation featuring a developed and a developing country is constructed. Motivated by Copenhagen COP of UNFCCC, we postulate that countries have agreed on a long-run emission abatement target, but they are yet to negotiate the specific terms of agreement. In the first stage, they negotiate emission reduction obligation that only the developed country bears. In the second stage, both countries bear the abatement obligation. As they engage in the first stage negotiation, they cannon commit themselves for the second period abatement, which leads to the well-known problem of incomplete contract. We associate this situation with so-called CDM Low Hanging Fruits problem. We examine the gain and loss on the part of the developing country to see if their low-hanging fruits are indeed shortchanged. [ABSTRACT FROM AUTHOR]