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”Most commercial fish species in nearly every ocean and sea are being rapidly depleted in what marine biologists and other specialists warn is evolving into one of the worst ecological disasters of modern times. According to the United Nations, the world’s 15 million fishermen and 23 million tons of fishing vessels represent twice as much fishing power as major stocks of fish can sustain.”
Assume that ocean fishing resembles a competitive market in the following ways…there are no significant barriers to entry and there are enough individual fishermen so that none of them can affect the market price of fish.
a) Explain why competitive markets normally lead profit maximizing firms to make choices about resource use that lead to an "efficient" allocation of resources to the market?
b) If unregulated competitive markets promote "efficient" patterns of resource use, why has unregulated competition led to such serious over allocation of resources to fishing?
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