Answer to Question #124634 in Microeconomics for Haruna Abdul-hafiz

Question

III. Suppose the government wants to control the use of the commons, what method exist for achieving the efficient level of use?

Answer 1

To use common resources efficiently it is necessary to design a mechanism that confronts the uses of resources with the marginal social consequences of their actions . The main methods include;

Property rights:- one way to remove the tragedy is to convert the common into private property.

Production quotas :- a quota can derive a wedge between marginal social benefit and Marginal social cost and can create a dead weight loss.