the total transfer is returned to the consumer. As noted earlier, with a vertical supply curve this whole transfer should be given back. It must be remembered, though, that this was merely a simplifying assumption. Even though we cannot claim that $40 billion of returned transfers is the most efficient level of rebate, the rebate plan has the advantage of flexibility. If $40 billion were not the most efficient sum, the rebate amount could be adjusted. Even if the money returned by rationing were found to be efficient, the rebate plan still has the advantage of providing money to the general public based on considerations other than car ownership. Moreover, rebates have the advantage of working through existing channels without creating a new currency. SUMMARY In terms of adaptability, rebates are useful at all levels of disruption. By proscribing the desired outcome, changes in a very dynamic system cannot distort the results. Changes in need and mistakes can be quickly corrected. Most importantly, the program can react quickly to the onset of the Operating through existing channels the money is added to regular weekly, bi-weekly, or monthly payments. Unlike rationing, the rebate system is a continuously functioning, continually adjusting system. emergency means activating a dormant part of the system, not implementing a new system from scratch. emergency. Dealing with an Finally, the rebate scheme not only functions more quickly, smoothly and efficiently, but it functions well while extending coverage to a wider population. This comprehensibility means that many of the households made worse off during an emergency are covered by rebates and not rationing. |