Pollution control quasi-equilibrium problems with joint implementation of environmental projects

In this paper, we show how one of the Kyoto Protocol mechanisms, the so-called joint implementation in environmental projects, can be transformed into and studied as an infinite-dimensional quasi-variational inequality. Specifically, we examine the situation in which different countries attempt to fulfill Kyoto commitments by investing in emission reduction or emission removal projects in countries where the abatement costs are lower. We derive the equilibrium conditions and prove their characterization in terms of an infinite-dimensional quasi-variational inequality problem. Finally, we discuss the existence of solutions.