The resource is used efficiently because the owner of

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Unformatted text preview: ommon Resources 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 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 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 03/14/2014.

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