Core-stable and Equitable Allocations of Greenhouse Gas Emission Permits

This paper deals with the issue of how to allocate greenhouse gas emission permits to nations in the long run. The so-called "equitable" rules to allocate such permits under a global agreement (per capita or grandfathering allocation rules for instance) do not necessarily ensure stability in the sense of the core of a cooperative game: some nations and groups of nations may typically be worse off under the global agreement than in alternative non-cooperative situations. We present a way to compute allocations of permits satisfying core constraints at each commitment period, while being as close as possible to any given "equitable" allocation. Then a simple world simulation model is used to analyze the long run welfare effects of these allocations.

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