A Common resource Price of fish Fishing in a public river MSC Each fishermans individual marginal cost does not indlude the cost that his or her actions impose on others: the depletion of OPT the common resource→ the marginal social cost curve. MSC lies above MKT le supply curve; in an KT unregulated market, the quantity of the common resource used, OMKT, exceeds the efficient quantity of use, QOPT. OPT Q Quantity of fish
A Common Resource Fishing in a public river: Each fisherman’s individual marginal cost does not include the cost that his or her actions impose on others: the depletion of the common resource → the marginal social cost curve, MSC, lies above the supply curve; in an unregulated market, the quantity of the common resource used, QMKT, exceeds the efficient quantity of use, QOPT
The efficient use and maintenance of a Common resource Use taxes a Make it excludable and assign property rights Create of a system of tradable licenses for the right to use the common resource
The Efficient Use and Maintenance of a Common Resource ◼ Use taxes ◼ Make it excludable and assign property rights ◼ Create of a system of tradable licenses for the right to use the common resource
Public good a good or service that, at least to some degree, is both non-rival and non- excludable Non-rival Good a good whose consumption by one person does not diminish its availability to others Non-excludable good A good that is difficult, or costly, to exclude non payers from consuming
Public Good: ◼ A good or service that, at least to some degree, is both non-rival and nonexcludable – Non-rival Good • A good whose consumption by one person does not diminish its availability to others – Non-excludable Good • A good that is difficult, or costly, to exclude nonpayers from consuming