2.8 common pool resources

Question 1

Common pool resources (def+2characteristics)

Answer 1

resources that are not owned by anyone, and hence do not have a price and are available for anyone to use without payment or any other restrictions

Common pool resources possess BOTH of these characteristics:
• Rivalrous—consumption of a good or resource by one entity reduces its availability for other entities
• Non-excludable—not possible to prevent entities from consuming a good or resource

Question 2

two characteristics that common pool resources shoul posses

Answer 2

rivalrous
non-excludable

Question 3

rivalrous and non-excludable resources

Answer 3

Rivalrous—consumption of a good or resource by one entity reduces its availability for other entities
• Non-excludable—not possible to prevent entities from consuming a good or resource
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Question 4

given the characteristics of common pool resources,

(exaplmels_

Answer 4

common pool resources may be overused, degraded, and/or depleted

When firms or consumers consume fossil fuels that emit pollutants into the clean air, these entities are “overusing” this common pool (clean air) without paying for it
• As a result of overfishing, fish stocks in international waters are being rapidly depleted
(Refer to Constantine, pg 52 and /or Tragakes pg 144-145 for more examples)

Question 5

sustainability

Answer 5

Sustainability—long-term viability of economic activities; concerned with the present generation’s ability to satisfy its needs and wants without compromising future generations’ ability to satisfy their needs and wants
⊹ Sustainability entails using resources in ways that do not result in fewer or lower-quality resources for future generations

Question 6

sustainable and unsustainable production

Answer 6

Sustainable production— production that uses resources in a way which does not degrade or deplete them
⊹ Unsustainable production— production that uses resources in a way which degrades or depletes them
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Question 7

renewable resources and examples

Answer 7

Renewable resources—resources that are
replenished over relatively short periods of time by natural processes such that it doesn’t run out, e.g., the sun, wind, water, biomass, tidal currents, geo & ocean thermal where energies could be tapped

Question 8

non renewable resources and examples

Answer 8

Non-renewable resources—resources that take thousands / millions of years to be replenished
• Notably, many non-renewable resources such as rare earth elements, gold, uranium, fossil fuels, etc, are depleted when used

Question 9

sustainable resource use

Answer 9

Sustainable resource use means that resources are used at a rate that allows them to be replenished, so that they do not become degraded or depleted
• While this concept applies mainly to renewable resources, it can also be applied to non-renewable resources in the context of recycling (an exception being fossil fuels)

Question 10

private goods

Answer 10

Private goods possess BOTH of these characteristics:
• Rivalrous—consumption of a good or resource by one entity reduces its availability for other entities
• Excludable—possible to prevent entities from consuming a good or resource

Question 11

market based policies purpose and policy examples

Answer 11

Market-based policies change the incentives faced by firms
• Indirect taxes (Pigouvian taxes)
• Fuel excise taxes
• Carbon taxes
• Tradeable permits

Question 12

indirect taxes and examples

Answer 12

Governments can impose indirect taxes on firms, per unit of output produced (and sold)

Also known as Pigouvian taxes—indirect taxes designed to correct negative externalities of production (or consumption)

carbon tax