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Market Failure: Fishing in indonesia (common access resource

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Aneet Singh

on 13 October 2015

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Transcript of Market Failure: Fishing in indonesia (common access resource

Market Failure:
Fishing in indonesia

(common access resource)

- Aneet and mrinalinini
Common access Resources
A resource, such as water or pasture, that provides users with tangible benefits (investopedia.com)

Or a resource which is open to all (non excludable) yet there is rivalry for the product as it is limited in nature

Example - Fish stock in the sea, coal through mining, timber
Case of Fish in Indonesia
Market Failure due to overfishing
Possible Government Responses
Definitions
Sustainability
is the capacity to endure; The ability of something to be preserved or maintained;Sustainability ensures that a resource does not fail to replenish itself.

Example - Sustainiablity to ensure that fish are only conumed to the limit where it is possible for them to replenish themselves by reproducing.
VIDEO LINK: http://edition.cnn.com/videos/world/2012/01/15/eco-solutions-bali-fish.cnn
- Fish in the sea is an open resource for all in Indonesia

- Fishermen use it for their private benefit and overexploit due to resource's free nature leading to overfishing

-Overfishing is causing depleting levels of fish in Indonesia (Negative externality of Consumption)

- Therefore, market failure is occuring as it poses a threat to sustainabilty of fish
This is an example of negative externality of consumption due to the fishermen's overconsumption
Legislation/ Regulation
- Setting a limit on quantity of fish caught
- Fishing permits/making fishing excludable
- Setting minimum weight floor for fish to ensure reproduction of species
- Banning fishing in areas of high extinction possibility till species replenish
- Banning fishing techniques like explosion and cyanide
Taxing Fishing
Taxing fishing would increase the cost, Therefore the MSC would shift up bringing the new equilibrium or operating level closer to the socially optimum one.
Advertising
Education, Awareness drives and campaigns against excessive fishing could help decrease the exploitation thus bring the MPB down and reduing externality
Thank you!
- Mrinalini and Aneet
Full transcript