Common resources common quotas by assigning setting a

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Unformatted text preview: ources Common Quotas –By assigning setting a production quota at the efficient quantity, a common resource might remain in common use but be used efficiently. Common Resources Common •Individual Transferable Quotas –An individual transferable quota (ITQ) is a production limit that is assigned to an individual who is free to transfer the quota to someone else. –A market emerges in ITQs. –If the efficient quantity of ITQs is assigned, the market price of a quota confronts resource users with a marginal cost that equals MSB at the efficient quantity. Common Resources Common ITQs –Marginal cost rises from MC0 to MC1. –Users of the resource make marginal private benefit, MPB, equal to marginal private cost, MC1, and the outcome is efficient....
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This document was uploaded on 03/13/2014.

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