Analysis of the Emission Reduction Problem within a Game Model of the Auction Type

The problem of emission reduction is considered within a game model of negotiation process. Negotiation process is presented as an auction in which an informational bureau (auctioneer) collects information among countries (auction participants) on their abilities to reduce emissions and forms price offers. Counties-participants maximize their own utility functions in response to proposed prices. The notion of the market equilibrium solution, which combines competitive and cooperative properties, is introduced within the framework of the auction model. An algorithm for searching the market equilibrium is proposed and illustrated by the game situation between European Union countries and Russia.