Question

There is a small lake in the rain forest that is home of large fish stocks. Only one tribe has access to that. Explain the determiation of optimal level of catch. Would there be a difference if all of the tribes had an access to that? Explain your answer. Could this situation be resolved through property rights and a Coasian bargaining process? Explain your answer.

Answer 1

Solution

Given that the lake has large fish stocks.Optimal level of catch means the best level of catch that is possible.

Catch of fish = effort (put in hours)* Catchability (efficieny of catching a fish) * Abundance

Since her it is given that there is large stocks of fish available .Also if all the tribes are allowed then both the components - catchability & effort.

So,Catch of fish will increase if all the tribes are allowed.But in case the pond is very small in relation to the number of tribal people fishing then the efficiency will reduce drastically which means lower amount of fish are caught for comparatively higher amount of hours of effort put up

Yes,this can be resolved through property rights and a Coasian bargaining process because there is no costs involved in this bargaining.So,who ever wins might get the property rights.The other party has no problem until unless it hasn't (or) doesn't have incurred any costs in the bargaining process.

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