Abstract: The problem of carbon emission reduction is discussed in this paper in the scenario of clean development mechanism (CDM) project adopted by multiple enterprises with stochastic output. A game model is developed to describe the problem. With the model, under the same CDM baseline, the profit, cost, equilibrium output, and carbon emission reduction are analyzed with different number of enterprises that adopt the CDM project. The same analysis is also done under different CDM baselines. Results show that, when there are different CDM baselines, an enterprise should take both its profit and the government preference into consideration. Also, it suggests that an enterprise should select a right baseline so as to obtain the government approval and get the maximal profit.

Key words: lowcarbon economy, clean development mechanism (CDM) baseline, game theory