Common resources and the tragedy of the commons Jake, Nick, and Tim are lumberja

Question

Common resources and the tragedy of the commons Jake, Nick, and Tim 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 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_________because the trees in the forest are_________and_________. Depending on whether Nick and Tim both choose to log either nonintensively or intensively. Till in Jake's profit-maximizing response in the following table, given Nick and Tim's actions. 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. Convert the forest to private property, and allow the owner to sell logging rights. Outlaw logging intensively. Develop a program that entices more lumberjacks to move to the area.

Explanation / Answer

1. Forest is an example of common resource

2. Trees in the forest are non-excludable and rival

3. If Nick and Tim both log nonintensively then, Jake's best response is to log intensively because one person intensively logging does not affect the forest.

If Nick and Tim both log intensively then, Jake's best response is to log intensively because forest will not exist for long run so Jake can also make profit today.

4. Outlaw logging intensively and convert the forest to private property, and allow the owner to sell logging rights.

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