Analysis of a quota trading mechanism

We study the model of regional environmental safety, when a Principal (the local government) sales environmental risk quotas to enterprises being the source of potential ecological danger. The total volume of risk quotas is limited. We suggest a quota assignment mechanism for the case when the total volume of bids exceeds the predefined total quota volume. We study the model when enterprises bye the quotas while a Principal performs monitoring of a real safety level in production and compares it with quotas sold.