The Grant Auction Mechanism in Chile was established as a way to pursue cost-effectiveness in projects that phase out the use of Ozone-Depleting Substances (ODS) through a competitive allocation of resources. The program is characterized by lower administrative costs for preparing and supervising projects. In addition, it reduces the overall costs to the Multilateral Fund (MLF) for the Implementation of the Montreal Protocol because firms are competing for limited resources and thus have an incentive to reduce their conversion costs. The program is consistent with Chile's preference for market-based solutions to environmental problems
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