Industry catch per marginal boat catch per marginal

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Unformatted text preview: ) Catch (per Marginal Private Marginal Social boat) 0 1 0 Benefit 90 0 90 Benefit 90 2 3 4 5 6 7 8 9 10 160 210 240 250 240 210 160 90 0 80 70 60 50 40 30 20 10 0 70 50 30 10 -10 -30 -50 -70 -90 Common Resources Common Resources •An Overfishing Equilibrium The average catch per boat, which is the marginal private benefit, MPB, decreases as the number of boats increases. The marginal cost per boat is MC (assumed constant). Overfishing Common Resources Common Resources –Efficient Use Use The marginal social benefit marginal social benefit curve, MSB, is the industry marginal catch per boat The resource is used efficiently when MSB equals MC. MC Common Resources Common Resources • Achieving an Efficient Outcome an Efficient Outcome –It is harder to achieve an efficient use of a common resource than to define the conditions common resource than to define the conditions under which it occurs. –Three methods in use are methods in use are – Property rights – Quotas – Individual transferable quotas (ITQs) Common Resources Common Resources •Property Rights –By assigning property rights, common property becomes private property. –When someone ow...
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