Unformatted text preview: tant). Overfishing Common Resources
–Efficient Use The marginal social benefit
curve, MSB, is the industry
marginal catch per boat
The resource is used
efficiently when MSB
equals MC. Common Resources
• Achieving an Efficient Outcome
–It is harder to achieve an efficient use of a
common resource than to define the conditions
under which it occurs.
–Three methods in use are
– Property rights
– Individual transferable quotas (ITQs) Common Resources
–By assigning property rights, common property
becomes private property.
–When someone owns a resource, the owner is
confronted with the full consequences of her/his
actions in using that resources.
–The social benefits become the private benefits. Common Resources
– Property Rights
– the marginal social
benefit curve, MSB,
becomes the marginal
private benefit curve.
–The resource is used
efficiently because the
owner of the resources
is best off when MSB
equals MC. Common Res...
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