2002 December 03 Tuesday
Vernon Smith: Pricing For Handling Terrorist Attacks

Brendan Miniter says new Noble Prize winner in economics, Vernon Smith, proposes the development of a pricing system to deal with the effects of electric shortages caused by a terrorist attack against nuclear power generation facilities:

It doesn't have to be this way. Instead, authorities could develop a pricing system that would help them determine which are the more important and essential uses of power in the event of an emergency. Price can quickly allocate power to where it is needed, helping the city ride out a major disruption while keeping the power on for hospitals and--by charging a little more--allow homeowners to run some of their more essential appliances. In short, even terrorists can't beat the laws of economics.

I think the really big problem that needs to be worked out ahead of time is how to quickly reduce exposure of people to other people in response to the terrorist release of some bioweapon that can be transmitted from person to person. Some essential services would need to be carried out. But the amount to which people would come into face-to-face contact would need to be radically reduced (and everyone would need to wear the equivalent of surgical masks and other stuff to reduce transmission of pathogens). Could an economic system be developed ahead of time to help deal with such a scenario?

Share |      By Randall Parker at 2002 December 03 10:41 AM 


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