6/8/2010

An auction system first proposed by the late economist Julian Simon 30 years ago, in which airlines would increase their offer of compensation if there aren't enough voluntary takers on overbooked flights, represents a highly efficient means of allocating a scarce resource. The auctions make more sense than the proposed new rules from the Department of Transportation on compensating passengers who are involuntarily bumped from oversold flights, according to this editorial.

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