Question

Suppose that there is a rural community with a lake, where everyone’s economic activity is fishing. Everyone in that community has more or less the same fishing equipment (boats, rods, etc.), the same fishing skills (knowledge about fishing), and the same luck catching the fish. All of the individual’s well-being depends on the quantity of fish they catch from the lake and then sell on the city. The price at which the fish is sold is not controlled by the fishermen, but rather determined by the market. In this context, the only way in which a single fisherman could out-compete another fisherman would be by fishing for longer hours and catching a larger quantity of fish. If the incentive for an individual fisherman is to fish larger quantities, then at some point the rate of reproduction of the fish is smaller than the rate of fishing, potentially depleting them.

A. Explain the problem with the incentive to out-compete other fishermen by continuing to fish more and more.

B. What evidence could indicate the problem you observed in 1?

C. Indicate the reasoning behind this problem. Why did it happen? What context could have led fishermen to try to follow this incentive?

D. Indicate the possible solution for the problem listed on 1. What could you suggest? What is your solution, based on a reasonable argument?

E. What are the implications and outcomes of your argument? Did you choose the right argument? If yes/no why?

Answer 1

A. The given case talks about a situation in which all the fishermen in the rural community has the same potential to catch fish and the only way by which one can gain an advantage is by fishing for longer periods. But, as it is said in the case, fishing for longer periods would result in such a situation where the reproduction rate of the fishes would be lesser than the rate of fishing. In such a case, the fishermen would not be able to get the kind of yield that they got at first and hence all the fishermen would be at a loss in the longer term of fishing. As the only means of competition is longer hours of fishing, in order to gain an advantage economically, everyone would resort to the same and hence in the longer term everyone would be the losers resulting in lower income in the process and finally leading to no income.

B. The evidence for lower income in the near future can be seen from the reduction in the catch owing to a reduced reproduction rate of the fishes as there is an increased fishing in the area. As the time progresses, the fishes in those area would be fully eliminated resulting in the loss of income for the fishermen due to overuse of the resources.

C. The problem with the increased fishing is as stated above. The fishermen would resort to this incentive as there are no other alternatives available for the fishermen to stay competitive in order to find the additional income. But in the process, there would be a reduction in the available resource which would finally destruct the whole income opportunity of all the fishermen in the area.

D. The possible solution for this issue is to have a compromising policy in fishing between all the available fishermen. Instead of all the competitors in the market approaching the same item on a daily basis, which would result in the exploitation of the resource and finally make the resource unavailable for use, it would be a better idea of sharing the resource which would result in a better opportunity for all the competitors and more importantly would protect the resource for the future.

E. The implication of the argument must be a healthy competitive environment where there would be availability of the resource and there would be income opportunity for all the competitors. The argument is the better approach in order to make sure that no competitors would be thrown out at a later stage of competition in order to make the competition active.