The market mechanisms built into the Kyoto Protocol have the potential of significantly reducing the costs of meeting the aggregate emission target. But if trading proceeds on a project-by-project basis rather than on a frictionless market, the total cost saving potential of trading is unclear....

We introduce a model of price competition with endogenous market transparency, where it is costly for consumers to get informed about the announced prices. We show that there is symmetric mixed strategy equilibrium with a monotonic relationship between the degree of transparency and intensity of...