To solve the common pool problem in fishing, governments can __________, or __________.
A)impose a depletion tax; prohibit resource use entirely
B)impose a depletion tax; restrict output
C)introduce an offsetting positive externality; prohibit resource use entirely
D)use a variable technology; impose a depletion tax
E)restrict output; prohibit resource use entirely

Question

Quizplus · Accepted Answer

Imposing a depletion tax would create a cost for fishing, incentivizing fishermen to reduce their output in order to reduce their cost. This would help prevent overfishing and depletion of the resource. Restricting output, such as through setting quotas or limiting the number of fishing permits, would also help prevent overfishing and depletion by limiting the amount of fishing that can take place. Prohibiting resource use entirely would be an extreme measure that may not be necessary if depletion tax and/or output restrictions are effective in solving the problem.

To Solve the Common Pool Problem in Fishing, Governments Can