CHAPTER 18 • Externalities and Public Goods 689 mines the annual total allowable catch and then allocates that catch to fishermen through individual fishing quotas determined through an auction or other allocative process.21 EX AMPLE 18 CRAWFISH FISHING IN LOUISIANA In recent years, crawfish have become a popular restaurant item In 1950, for example, the annual crawfish harvest in the Atchafalaya River basin in Louisiana was just over million pounds By 1995, it had grown to over 30 million pounds Because most crawfish grow in ponds to which fishermen have unlimited access, a common property resource problem has arisen: Too many crawfish have been trapped, causing the crawfish population to fall far below the efficient level.22 How serious is the problem? Specifically, what is the social cost of unlimited access to fishermen? The answer can be found by estimating the private cost of trapping crawfish, the marginal social cost, and the demand for crawfish Figure 18.12 shows portions of the relevant curves Private cost is upward-sloping: As the catch increases, so does the additional effort that must be made to obtain it The demand curve is downward sloping but elastic because other shellfish are close substitutes We can find the efficient crawfish catch both graphically and algebraically Let F represent the catch of crawfish in millions of pounds per year (shown on the horizontal axis), and let C represent cost in dollars per pound (shown on the vertical C Cost (dollars per pound) Marginal Social Cost F IGURE 18.12 2.10 CRAWFISH AS A COMMON PROPERTY RESOURCE Private Cost 0.325 Demand 9.2 11.9 Because crawfish are bred in ponds to which fishermen have unlimited access, they are a common property resource The efficient level of fishing occurs when the marginal benefit is equal to the marginal social cost However, the actual level of fishing occurs at the point at which the price for crawfish is equal to the private cost of fishing The shaded area represents the social cost of the common property resource F Crawfish catch (millions of pounds) 21 For details, see the Environmental Defense Fund report, “Sustaining America’s Fisheries and Fishing Communities: An Evaluation of Incentive-Based Management,” authored by Lawrence J White (2007) 22 This example is based on Frederick W Bell, “Mitigating the Tragedy of the Commons,” Southern Economic Journal 52 (1986): 653–64