Market failure with common resources occurs because:
A)the government susbidises everyone's consumption of the resource
B)it is difficult to obtain international agreements with fisheries
C)ship captains avoid ports without lighthouses
D)users impose a negative externality on other people who share use of the resource

Question

Quizplus · Accepted Answer

Common resources, such as fisheries or forests, are often subject to market failure because they are rivalrous and non-excludable, meaning that one person's use of the resource reduces the amount available for others, and it is difficult to prevent others from using it. This creates a situation where users impose a negative externality on others who share the use of the resource, leading to overuse or depletion of the resource beyond its sustainable level. Therefore, the best choice is D.

Market Failure with Common Resources Occurs Because