When producers are hard to monitor and marginal costs differ across producers, ________ are an effective method to achieve efficient use of a ________.
A) individual transferable quotas; public good
B) marginal private benefits; public good
C) individual transferable quotas; common resource
D) individual transferable quotas; excludable good

Question

Quizplus · Accepted Answer

Individual transferable quotas (ITQs) are effective for managing common resources because they allow for the allocation of usage rights among producers, ensuring that those with lower marginal costs can use more of the resource, leading to efficient resource use.

When Producers Are Hard to Monitor and Marginal Costs Differ