The lack of management of common-property externalities is often a property rights problem caused by the lack of __________ that assigns individual or small-group property rights.
A) an institution
B) tax law
C) a market
D) political pressure

Question

Quizplus · Accepted Answer

The lack of management of common-property externalities, such as pollution or overfishing, can often be traced back to a lack of property rights. In order for individuals or small groups to have the incentive to manage and conserve a resource, they need to have clear property rights and the ability to exclude others from using the resource. This is often lacking in common-property situations, where no one person or group has clear ownership or control of the resource. Institutions can help to establish and enforce property rights, thereby addressing the common-property externality problem. Tax law, a market, and political pressure may also play a role in some cases, but they are less directly related to the assignment of property rights.

The Lack of Management of Common-Property Externalities Is Often a Property