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Bargaining for an Efficient and Fair Allocation of Emission Permits to Developing Countries

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  • Hans Kremers
  • Harold Houba

Abstract

The paper focusses on the negotiations between the developed countries currently implementing emission permit markets versus the developing countries who want to join this market. We model the negotiations according to the ’Alternating Offers Bargaining’ model. The objective is to obtain an efficient and fair allocation of tradeable emission permits between these two players. At each period, one player proposes a feasible allocation of the goods for both players. Then the other player either ends the negotiations by accepting the proposal, or prolongs them by rejecting it. The proposal is accepted if this player considers it fair. If rejected, there is a certain probability that the next round is played and the other player making a proposal. The equilibrium concept in this model is that of a subgame perfect equilibrium.
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Suggested Citation

  • Hans Kremers & Harold Houba, 2007. "Bargaining for an Efficient and Fair Allocation of Emission Permits to Developing Countries," Energy and Environmental Modeling 2007 24000028, EcoMod.
    • Handle: RePEc:ekd:000240:24000028
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    References listed on IDEAS

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