Divergence of Private and Social Costs in Overfishing
In the context of fishing, the private marginal cost borne by an individual fisher is significantly lower than the social marginal cost. This discrepancy exists because the social cost includes the negative externality of resource depletion, which affects all other fishers and future generations. Because individual fishers do not bear the full social cost of their actions, they have an incentive to overfish, leading to an inefficiently high level of extraction.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
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