question archive Raphael, Alex, and Clancy 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
Raphael, Alex, and Clancy 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
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Raphael, Alex, and Clancy 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 (private good/public good/common resource/club good) because the trees in the forest are (nonexcludable/excludable) and (nonrival in consumption/rival in consumption) .
Depending on whether Alex and Clancy both choose to log either nonintensively or intensively, fill in Raphael's profit-maximizing response in the following table, given Alex and Clancy's actions.
| Alex and Clancy's Actions | ||
|---|---|---|
| Log Nonintensively | Log Intensively | |
| Raphael's Profit-Maximizing Response | (log intensively / nonintensively) | (log intensively / nonintensively) |
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.
- Develop a program that entices more lumberjacks to move to the area.
- Outlaw logging intensively.
- Convert the forest to private property, and allow the owner to sell logging rights.
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The situation of the three loggers is an example of the tragedy of the commons.
The forest is an example of a common resource because the trees in the forest are nonexcludable (anyone is allowed to harvest them) and rival in consumption(once one logger takes a tree, it becomes unavailable to the others).
No matter what strategy any logger chooses, each logger's rational response is to maximize his own profit by logging intensively.
Which of the following solutions could ensure that the forest is sustainable in the long run, assuming that the regulation is enforceable?
| Develop a program that entices more lumberjacks to move to the area. | No, this will make a bad situation worse. |
| Outlaw logging intensively. | A possible solution provided the term "intensively" can be quantified. |
| Convert the forest to private property, and allow the owner to sell logging rights. | Another possible solution, if there is a way to value the property accurately. |
