Wonderful Politics of Cap-and-Trade

摘要

Despite all the hand-wringing in the press about a political "giveaway" of allowances in the climate change legislation being considered in Congress, the politics of cap-and-trade systems are actually quite wonderful, which is why these systems have been used, and successfully. The initial distribution of allowances - whether the allowances are auctioned or given out freely, and how they are freely distributed - has no impact on the allocation of allowances after trading, and therefore no impact on the allocation of emissions or emissions abatement, the total quantity of emissions, or the total social costs.