Suppose the Alaskan king crab harvest is unregulated and any person with a crab boat and some diesel fuel can go offshore, lower a crab pot, and harvest king crab. As a result, this common resource is overused. Which of the following policy choices might produce the socially optimal king crab harvest?
A) Alaska subsidizes the purchase of crab boats.
B) Alaska auctions a limited number of licenses to harvest king crab.
C) Alaska removes taxes on diesel fuel, which lowers the price of diesel.
D) The U.S. and Canadian governments remove trade barriers, which allows for more trade of products like king crab.
Correct Answer:
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