If you had an asset worth billions of dollars, would you give it away free? No? Would you hand it over if charging for it would clobber farmers with added expense, hobble businesses in similar fashion, boost unemployment and raise the cost of living for just about everyone?
To hear policy wonks and special-interest types spin it, those are the consequences lawmakers face in considering an allocation scheme for carbon-emission permits. And, right now, some 85 percent of the permits that will give utilities and other organizations the right to emit greenhouse gases into the atmosphere are going to be given away free of charge. Is that allocation scheme in the best interest of U.S. citizens? That's one of the questions legislators will consider in coming months.
Musical chairs
In economics, allocation is how we determine who gets what. "The reason we talk about allocation is because not everyone gets what they want," explains William Boyes, an economics professor at the W. P. Carey School of Business. "There is a limited supply of resources, and we have to figure out the best way to distribute those resources to the people who want them."
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