Global warming, as a result of greenhouse gases, is exceeding the planet’s temperature stabilization capacities. Thus, gas emissions must be reduced. We analyse bankruptcy situation aimed at allocating permits CO2, predominant emitted by human activities. Inspired Constrained Equal Awards (CEA) solution for situations, we introduce new allocation protocol based on extension CEA over double-weig...

By constructing a dynamic general equilibrium model this paper studies the optimal pollution emission and abatement policies for a small economy. We show that in autarky government issues an optimal level of emission permits but its optimal abatement level is zero at the unique steadystate equilibrium. On the other hand, government employs an optimal two-dimensional policy with free trade if th...