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Sustainable allocation of greenhouse gas emission permits for firms with Leontief technologies

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  • Gutiérrez, E.
  • Llorca, N.
  • Sánchez-Soriano, J.
  • Mosquera, M.

Abstract

In this paper we deal with production situations where a cap or limit to the amount of greenhouse gas emissions permitted is imposed. Fixing a tax for each ton of pollutant emitted is also considered. We use bankruptcy rules to define cooperative games with externalities associated with these situations and analyze the existence of coalitionally stable allocations of the emission permits. We prove that the constrained equal awards (CEA) rule provides stable allocations and as a direct mechanism, it is incentive compatible. These two facts have interesting managerial implications to control pollution emissions.

Suggested Citation

  • Gutiérrez, E. & Llorca, N. & Sánchez-Soriano, J. & Mosquera, M., 2018. "Sustainable allocation of greenhouse gas emission permits for firms with Leontief technologies," European Journal of Operational Research, Elsevier, vol. 269(1), pages 5-15.
    • Handle: RePEc:eee:ejores:v:269:y:2018:i:1:p:5-15
    DOI: 10.1016/j.ejor.2017.10.011
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    8. Algaba, E. & Márquez, G. & Martínez-Lozano, J. & Sánchez-Soriano, J., 2023. "A novel methodology for public management of annual greenhouse gas emissions in the European Union," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    9. Elisabeth Gutierrez & Natividad Llorca & Manuel Mosquera & Joaquin Sanchez-Soriano, 2019. "On horizontal cooperation in linear production processes with a supplier that controls a limited resource," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 90(2), pages 169-196, October.
    10. Saavedra-Nieves, Alejandro & Saavedra-Nieves, Paula, 2020. "On systems of quotas from bankruptcy perspective: the sampling estimation of the random arrival rule," European Journal of Operational Research, Elsevier, vol. 285(2), pages 655-669.
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