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Developing Countries' Response To The Clean Development Mechanism Under Imperfect Information And Transaction Costs

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  • ALBERT N. HONLONKOU

    (Ecole Nationale d'Economie Appliquée et de Management (ENEAM), University of Abomey-Calavi, Benin)

  • RASHID M. HASSAN

    (Center for Environmental Economics and Policy in Africa (CEEPA), Department of Agricultural Economics, Extension and Rural Development, Faculty of Natural and Agricultural Sciences, University of Pretoria, Pretoria 0002, Republic of South Africa)

Abstract

Developing countries are struggling for finding resources to finance their adaptation to or mitigation of the effects of climate change. In that spirit, the Copenhagen summit, the fifteenth Conference of Parties (COP15) can be seen as a success since it ended with an important promise of creation of a common fund of $US 100 billions per year over the period 2013–2020 to help poor and emerging countries to support adoption of costly but eco-friendly technologies. However, implementation of former instruments shows mixed results. In this paper, we show that transaction costs effect dominates asymmetric information effect in impeding some developing countries to benefit from the clean development mechanism, one of the instruments of the implementation of the Kyoto Protocol. Thus environmental instruments may be useless if they are not supplemented by policies to reduce transaction costs in the host countries.

Suggested Citation

  • Albert N. Honlonkou & Rashid M. Hassan, 2015. "Developing Countries' Response To The Clean Development Mechanism Under Imperfect Information And Transaction Costs," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 6(01), pages 1-22.
    • Handle: RePEc:wsi:ccexxx:v:06:y:2015:i:01:n:s2010007815500013
    DOI: 10.1142/S2010007815500013
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    References listed on IDEAS

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    1. Eric Malin & David Martimort, 2000. "Transaction Costs and Incentive Theory," Revue d'Économie Industrielle, Programme National Persée, vol. 92(1), pages 125-148.
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    4. Claude Menard & Mary M. Shirley (ed.), 2005. "Handbook of New Institutional Economics," Springer Books, Springer, number 978-0-387-25092-2, September.
    5. Satoguina, Honorat, 2006. "Mapping Sustainability Preferences of West African Economic and Monetary Union. Case Study: Benin, Burkina Faso and Niger," HWWA Discussion Papers 353, Hamburg Institute of International Economics (HWWA).
    6. World Bank, 2010. "World Development Report 2010," World Bank Publications - Books, The World Bank Group, number 4387.
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    Cited by:

    1. Bortoletto, Wagner Wilson & Pacagnella Junior, Antonio Carlos & Cabello, Otavio Gomes, 2023. "Exploring the scientific literature on clean development mechanisms: A bibliometric analysis," Energy Policy, Elsevier, vol. 183(C).
    2. Tiberio Daddi & Niccolò Maria Todaro & Maria Rosa De Giacomo & Marco Frey, 2018. "A Systematic Review of the Use of Organization and Management Theories in Climate Change Studies," Business Strategy and the Environment, Wiley Blackwell, vol. 27(4), pages 456-474, May.

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    More about this item

    Keywords

    Climate change; clean development mechanism; information asymmetry; transaction cost; developing countries; D23; D82; O13; Q01; Q54; Q55;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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