Discuss the pros and cons of the followingmethods for distributing the initial allocationof permits when the permits are tradable: (i))equal allocation to all firms, (ii) allocationproportional to current emissions, (iii) auctionof permits.Consider the impact on efficiency of the policy(both static and dynamic where dynamicrefers to the encouragemnt of newtechnology), equity or the distribution of thebenefits of the program, and the governmentbudget.

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Discuss the pros and cons of the following methods for distributing the initial allocation of permits when the permits are tradable: (i)) equal allocation to all firms, (ii) allocation proportional to current emissions, (iii) auction of permits.

Discuss the pros and cons of the following methods for distributing the initial allocation of permits when the permits are tradable: (i)) equal allocation to all firms, (ii) allocation proportional to current emissions, (iii) auction of permits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Discuss the pros and cons of the following
methods for distributing the initial allocation
of permits when the permits are tradable: (i))
equal allocation to all firms, (ii) allocation
proportional to current emissions, (iii) auction
of permits.
Consider the impact on efficiency of the policy
(both static and dynamic where dynamic
refers to the encouragemnt of new
technology), equity or the distribution of the
benefits of the program, and the government
budget.

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