Principles of Microeconomics / Unit 12 MIC 1118 review, 2 to 3 minutes
The Commons: One Fishery
The idea
A lake fishery under open access and then under each remedy shows the tragedy of the commons and how each remedy works on it. The lake is nonexcludable and rival. As boats are added the total catch rises by less each time, since they crowd the same water. Under open access each owner looks at the average catch and enters while it covers the cost of a boat. But each entrant lowers every other boat's catch, and ignores that loss because it falls on others. So boats keep coming past the point where the marginal catch pays for the boat, until the average only covers the cost and every boat earns nothing. That is the tragedy: the lake's rent dissipated in wasted boats. The efficient number is where the marginal catch equals the cost of a boat, which a single owner would choose, counting the loss to the other boats. The remedies follow. A license limit sets the number of boats by law. A catch share sets the total allowable catch and divides it into transferable rights, so each holder owns a piece of the lake and can sell it to the most efficient boats. Private ownership makes the owner count everything, the cattle-and-buffalo lesson. And Ostrom found that a small community of fishers who watch each other can enforce a limit themselves. Every remedy gives someone a reason to count the fish a boat takes from the others.
In practice
Worked example: fish sell for a dollar and a boat costs fifty dollars a day. Total catch with one to eleven boats is one hundred, one ninety, two seventy, three forty, four hundred, four fifty, four ninety, five twenty, five forty, five fifty and five fifty, so the marginal catch runs one hundred, ninety, eighty, seventy, sixty, fifty, forty, thirty, twenty, ten and zero. The efficient number is six boats, where the marginal catch of fifty equals the cost: four hundred fifty fish, one hundred fifty dollars of profit. The average catch at six boats is seventy-five, so more enter; at eleven boats the average is fifty, equal to the cost, and entry stops. Eleven boats catch five hundred fifty fish for five hundred fifty dollars: profit zero. A cap of six licenses, or a catch of four hundred fifty divided into shares, restores the rent.
Where people slip
Three cautions. Open access does not mean zero fish; it means zero profit and a stock run down to where nobody gains by entering, and biological collapse can follow, which this example leaves out. Fixing the number of boats leaves each racing to catch first, so seasons shorten and gear grows; catch shares end the race, which is why economists prefer them. And Hardin's word tragedy is about incentives, not character; each fisher does what pays, and the fix changes what pays.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
Unlocks
- Nothing yet depends on this.
Something wrong in this lesson? Flag it