For centuries, Alaskans relied on salmon and other freshwater fish for protein, oil, and other nutrients. But when jetliners began flying tourists who love fishing from Seattle to Anchorage in the 1950s, the stock of Alaskan salmon began falling. Following the advice of environmental scientists and economists, the Department of Fish and Game introduced restrictions on the minimum size (28 inches) and the number of salmon caught (5 per day). Among their concerns was the high fraction of young salmon caught before they could reproduce. a. Are Alaskan salmon a private good, public good, or a common resource?
b. How does the equilibrium quantity in the market compare to the socially optimal quantity of fish caught? Draw a graph.
c. What are two government policy interventions which could deal with this market failure?