Question

6. Common resources and the tragedy of the commons

Darnell, Jacques, and Musashi are lumberjacks who live next to a forest that is open to logging; in other words, anyone is free to use the forest for logging. Assume that these men are the only three lumberjacks who log in this forest and that the forest is large enough for all three lumberjacks to log intensively at the same time.

Each year, the lumberjacks choose independently how many acres of trees to cut down; specifically, they choose whether to log intensively (that is, to clear-cut a section of the forest, which hurts the sustainability of the forest if enough people do it) or to log nonintensively (which does not hurt the sustainability of the forest). None of them has the ability to control how much the others log, and each lumberjack cares only about his own profitability and not about the state of the forest.

Assume that as long as no more than one lumberjack logs intensively, there are enough trees to regrow the forest. However, if two or more log intensively, the forest will become useless in the future. Of course, logging intensively earns a lumberjack more money and greater profit because he can sell more trees.

The forest is an example of (a private good; a common resource; a club good; a public good) because the trees in the forest are (excludable; nonexcludable) and (nonrival in consumption; rival in consumption).

Depending on whether Jacques and Musashi both choose to log either nonintensively or intensively, fill in Darnell's profit-maximizing response in the following table, given Jacques and Musashi's actions.

	Jacques and Musashi's Actions
	Log Nonintensively	Log Intensively
Darnell's Profit-Maximizing Response

Which of the following solutions could ensure that the forest is sustainable in the long run, assuming that the regulation is enforceable? Check all that apply.

___ Outlaw intensive logging.

___ Develop a program that entices more lumberjacks to move to the area.

___ Convert the forest to private property and allow the owner to sell logging rights.

Answer 1

The forest is an example of ( a common resource) because the trees in the forest are ( nonexcludable) and ( rival in consumption).
Commmon resources are good which are both rival in consumption and non excludable.

Darnell's Profit-Maximizing Response will be to log intensively
He will log intensively when Jaques and Musashi are logging non intensively since Darnell's decision will not have any major impact on forest.If both of them log intensively then the forest will be useless next year so he will log now to make most profit.

Outlaw intensive logging.
Convert the forest to private property and allow the owner to sell logging rights.
This will regulate logging