5. Suppose a government attempts to compare two potential remedies t.docx

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5. Suppose a government attempts to compare two potential remedies to reduce fishing effort. The first remedy is increasing the per-unit tax on fishing effort. The per-unit tax on effort is represented as a leftward rotation of the total cost curve around the zero effort point (i.e. the marginal cost of fishing effort increases). The second remedy is increasing the cost of a fishing license. The increase in the license fee is represented as a parallel upward shift of the total cost curve (i.e. marginal cost of fishing effort does
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Unformatted text preview: not change). Assume that these two remedies raise the same amount of cost at the open-access outcome. In addition, the fishery under these remedies would still be profitable. (10 marks) a) Assume the fishery is private property with exclusivity. Compare the effect on fishing effort of these two remedies. (5 marks) b) Assume the fishery is governed under an open-access regime, which does not have exclusivity. Compare the effect on fishing effort of these two remedies. (5 marks)...
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