The marginal cost per boat is mc assumed constant

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Unformatted text preview: tant). Overfishing Common Resources Common –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 Common • 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 – Quotas – Individual transferable quotas (ITQs) Common Resources Common •Property Rights –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 Property – 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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