The chief decides to require a fishing license for reef

Reference no: EM13852885

An island has two reefs that are suitable for fishing, and there are twenty fishers who simultaneously and independently choose at which of the two reefs (1 or 2) to fish. Each fisher can fish at only one reef. The total number of fish harvested at a single reef depends on the number of fishers who choose to fish there. The total catch is equally divided between the fishers at the reef. At reef 1, the total harvest is given by f1(r1)=8r1-r^2/2, where r1 is the number of fishers who select reef 1. For reef 2, the total catch is f2(r2)=4r2, where r2 is the number of fishers who choose reef 2. Assume that each fisher wants to maximize the number of fish that he or she catches.

a. Find the Nash equilibrium of this game. In equilibrium, what is the total number of fish caught?

b. The chief of the island asks his economics advisor whether this arrangement is efficient, what is the answer? What is the efficient number of fishers at each reef?

c. The chief decides to require a fishing license for reef 1 which would require each fisher who fishes there to pay the chief x fish. Find the Nash equilibrium of the resulting location choice game between the fishers. IS there a value of x such that the equilibrium choices of the fishers results in an efficient outcome? If so, what is this value of x?

Reference no: EM13852885

Questions Cloud

How will the income levels differ between them : Suppose that we are comparing two countries that are similar in every respect except the education of their population. In country 1, adults have 10 years of education. In country 2, alladults have 4 years of education. Use intuitions from the Solow ..

The two countries have the same levels of productivity : Suppose that there are two countries, X and Y, that differ in their rates of investment andtheir population growth rates. In Country X, investment is 20% of GDP and the populationgrows at 0% per year. In Country Y, investment is 5% of GDP, and the po..

How much oil does the department of energy''s energy : How much oil does the Department of Energy's Energy Information Service (EIS) predict the ANWR will produce?

Describe a specific tariff and ad valorem tariff : Describe a specific tariff, an ad valorem tariff, and a compound tariff. What are the advantages and disadvantages of each?

The chief decides to require a fishing license for reef : The chief decides to require a fishing license for reef 1 which would require each fisher who fishes there to pay the chief x fish. Find the Nash equilibrium of the resulting location choice game between the fishers. IS there a value of x such that ..

Explain why a nation that imposes tariffs on imported goods : Explain why a nation that imposes tariffs on imported goods may find its welfare improving should the tariff result in a favourable shift in the terms of trade.

Calculate the effective rate of protection : Suppose that the production of $1 million worth of steel in Mexico requires $100,000 worth of taconite. Mexico's nominal tariff rates for importing these goods are 20 percent for steel and 10 percent for taconite. Given this information, calculate th..

Write the equation for output : The questions below are about working with the Cobb Douglas model α= 0.3 and A= 3. write the equation for output. find the MPK and MPL in terms of K and L.

Supply and demand curves : Do you agree or disagree with each of the following statements? Briefly explain your answers and illustrate each with supply and demand curves. 1. The price of a good rises, causing the demand for another to fall. Therefore, the two goods are substi..

User Account

All Pages