be costly to tax payers as it provided for very high levels of free allocation of emission units to emitters. In August 2007, Infometrics economist Adolf Stroombergen wrote an opinion article about permit auctions and free allocation for the Dominion Post. Stroombergen noted that giving permits to emitters instead of selling them in an auction had very different wealth distribution effects, with major emitters the biggest beneficiaries. So he asked why allocate and not auction? One reason is to compensate firms for 'stranded' assets that have less value due to emissions trading. In that case the compensation should only be the loss in asset value. Stroombergen considered New Zealand was only likely to have a few 'stranded' assets. The second reason is to compensate firms who may be at competitive disadvantage with overseas firms whose emissions are without a carbon price. Stroombergen considered that only basic commodities competing entirely on price would face this competitive risk, and that he would expect to see most permits auctioned, not given away as there is no economic basis for ongoing free allocation of permits. In May 2008, Chris Schilling, an economist at the New Zealand Institute of Economic Research (NZIER), argued that free allocation of emissions units to ‘at-risk’ firms competing in export markets was necessary to maintain their competitiveness. Schilling also argued that the assumption that allocation is a transfer of wealth from households to industry may also be incorrect. This is based on NZIER modelling which suggests that because allocation protects the competitiveness of New Zealand firms, it reduces the economic impact of the ETS. So the cost of allocation needs to be measured against the cost of not giving allocation. Finally Schilling states that allocation is needed to maintain the environmental integrity of the scheme. Allocation to efficient New Zealand firms reduces the risk that emissions will 'leak' offshore. Reducing the output of New Zealand firms, it is argued, will result in increased production in another nation, and perhaps a net increase in global emissions. Economist Geoff Bertram compared the price incentives of the 2008 NZ ETS with a carbon or greenhouse gas tax for Kyoto commitment period 1, 2008 to 2012. A tax of $NZ30 per tonne, on the 386 million tonnes of emitted greenhouse gases likely to be emitted from 2008 to 2012, would give a price signal (or government revenue) of $NZ11.6 billion. The exemptions and subsidies