Analysis of the Bargain Power under Clean Development Mechanism with Game Theory

Abstract

According to the problem of the Chinese’s enterprise’s poor bargaining power of CERs under CDM mechanism, we used the game theory to analyze the reason why the Chinese enterprise’s bargain power is so weak and why they stay on the low level of the value chain. The game model first compared the market share and the CERs deal price in the individual negotiation condition with and without the CERs trading. And then discussed the CERs deal price in the alliance condition. The result shows that the alliance of the Chinese enterprises will enhance their bargain power in the CDM mechanism and supports the necessity of establishing carbon exchange mechanism in China.