4. Common resources and the tragedy of thecommons
Rajiv, Yakov, and Charles are lumberjacks who live next to aforest that is open to logging; in other words, anyone is free touse the forest for logging. Assume that these men are the onlythree lumberjacks who log in this forest and that the forest islarge enough for all three lumberjacks to log intensively at thesame time.
Each year, the lumberjacks choose independently how many acresof trees to cut down; specifically, they choose whether to logintensively (that is, to clear-cut a section of the forest, whichhurts the sustainability of the forest if enough people do it) orto log nonintensively (which does not hurt the sustainability ofthe forest). None of them has the ability to control how much theothers log, and each lumberjack cares only about his ownprofitability and not about the state of the forest.
Assume that as long as no more than one lumberjack logsintensively, there are enough trees to regrow the forest. However,if two or more log intensively, the forest will become useless inthe future. Of course, logging intensively earns a lumberjack moremoney and greater profit because he can sell more trees.
The forest is an example of   because the trees in theforest are   and   .
Depending on whether Yakov and Charles both choose to log eithernonintensively or intensively, fill in Rajiv's profit-maximizingresponse in the following table, given Yakov and Charles'sactions.
| Yakov and Charles's Actions |
|---|
Log Nonintensively | Log Intensively |
|---|
| Rajiv's Profit-Maximizing Response | Â Â | Â Â Which of the following solutions could ensure that the forest issustainable in the long run, assuming that the regulation isenforceable? Check all that apply. Develop a program that entices more lumberjacks to move to thearea. Outlaw intensive logging. Convert the forest to private property, and allow the owner tosell logging rights. |
