Suppose the environmental regulatory agency decides to try a novel distribution of a limited quantity of pollution rights for a uniformly mixing pollutant. Instead of Plan A (grandfathering these limited rights to polluting firms), they decide to use Plan B (just to mail each of the available tradable permits to a different randomly selected U.S. resident). Can the eventual allocation of pollution abatement responsibility across polluting firms be expected to look pretty much like it would if the permits had been "grandfathered" to each of the polluting firms in proportion to their previous emissions? How are the "distributional consequences" different? In what way is "Plan B" similar to Plan C (the government simply auctions the permits to firms and puts the proceeds toward the provision of public goods for society)?
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Suppose the environmental regulatory agency decides to try a novel distribution of a limited quantity of pollution rights for a uniformly mixing pollutant. Instead of Plan A (grandfathering these limited rights to polluting firms), they decide to use Plan B (just to mail each of the available tradable permits to a different randomly selected U.S. resident). Can the eventual allocation of pollution abatement responsibility across polluting firms be expected to look pretty much like it would if the permits had been "grandfathered" to each of the polluting firms in proportion to their previous emissions? How are the "distributional consequences" different? In what way is "Plan B" similar to Plan C (the government simply auctions the permits to firms and puts the proceeds toward the provision of public goods for society)?