When producers are hard to monitor and property rights are too costly,________ are an effective method to achieve efficient use of a ________.
A) individual transfer quotas; public good
B) making a government payment equal to the marginal private benefits; public good
C) individual transferable quotas; common resource
D) individual transferable quotas; excludable good
E) making a government payment equal to the marginal private costs; common resource

Question

Quizplus · Accepted Answer

Individual transferable quotas (ITQs) are a market-based approach to managing fish stocks that can prevent overfishing and ensure that fish stocks remain at sustainable levels. When it becomes difficult or expensive to monitor fishing activities and enforce fishing regulations, ITQs can be an effective tool to achieve efficient use of a common resource. By assigning individual quotas to each fisher, ITQs create a market for fishing rights, incentivizing fishers to fish sustainably, conserve fish stocks, and trade quotas with each other. This allows for a flexible and efficient use of the resource, while preventing overfishing and ensuring the long-term viability of the fishery.

When Producers Are Hard to Monitor and Property Rights Are