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Cap and trade doesn't work the way you say. It isn't an auction. See the article.

• Alex3917 10y ago
  > Cap and trade doesn't work the way you say. It isn't an auction. See the article. The initial credits can be allocated either through an auction, by giving them away to existing polluters, or through some combination. But after the initial allocation, credits are traded on the market. That's the 'trade' part in cap and trade.
  • rayiner 10y ago
    And Coase theorem says it doesn't matter who gets the credits--they'll eventually find their way to the most efficient allocation.
    • AnthonyMouse 10y ago
      It doesn't matter who gets the credits as far as efficiency in reducing carbon emissions. It matters quite a lot financially however, because the credits are worth money, so anybody who gets them for less than the market price is in for a windfall.
    • SilasX 10y ago
      The Coase Theorem says it wouldn't matter for purposes of optimal allocation if there weren't transaction costs. The Coase Theorem doesn't guarantee the absence of transaction costs in practice (and they are likely to be huge here, since the dude who likes incandescent light is going to be very far removed from the high-volume market), and it does guarantee that initial allocation will affect the wealth distribution.