blogospheroid comments on California Drought thread - Less Wrong
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High prices do two different kinds of parallel rationing. They ration the good to its higher marginal utility uses: people who need it more will be willing to sacrifice more for it. This is a good thing. They also ration the good away from the poor and towards the rich. This is not really a good thing.
How could, in general, one have the first but not the second? Ration a thing to high marginal utility uses, but ability to afford, income, social class should not play much a role?
My attempt: let the price go high, because it incentivizes production. But also subsidize a certain quota of it per person, roughly as much as the highest marginal utility use is (drink, one quick shower etc. calculate it). Make the quota sellable, transferable, because people will do it anyway on the black market.
Letting market prices reign everywhere, but providing a universal basic income is the usual economic solution.