absence of property rights

Question 1

what is the market failure resulting from lack of property rights

Answer 1

over-consumption/production because of non-excludability. Some people use the good without paying, knowing others will maintain the good

Question 2

what are the steps in the coase theorem

Answer 2

1. one party is causing negative externality
2. without properly rights the farmer and fisher may engage in lengthy legal dispute
3. governments should assign property rights to one party
4. both parties negotiate to agree on either the value of the lost output or the value of the externality

Question 3

what is the tragedy of the commons

Answer 3

a social and political problem in which each individual is incentivised to act in a way that will ultimately be harmful to all individuals e.g deforestation