TAILIEUCHUNG - Ten Principles of Economics - Part 24

Ten Principles of Economics - Part 24. Economics is the study of how society manages its scarce resources. In most societies, resources are allocated not by a single central planner but through the combined actions of millions of households and firms. Economists therefore study how people make decisions: how much they work, what they buy, how much they save, and how they invest their savings. Economists also study how people interact with one another. | CHAPTER 11 PUBLIC GOODS AND COMMON RESOURCES 239 buffalo roamed the continent. Yet hunting the buffalo was so popular during the nineteenth century that by 1900 the animal s population fell to about 400 before the government stepped in to protect the species. In some African countries today the elephant faces a similar challenge as poachers kill the animals for the ivory in their tusks. Yet not all animals with commercial value face this threat. The cow for example is a valuable source of food but no one worries that the cow will soon be extinct. Indeed the great demand for beef seems to ensure that the species will continue to thrive. Why is the commercial value of ivory a threat to the elephant while the commercial value of beef is a guardian of the cow The reason is that elephants are a common resource whereas cows are a private good. Elephants roam freely without any owners. Each poacher has a strong incentive to kill as many elephants as he can find. Because poachers are numerous each poacher has only a slight incentive to preserve the elephant population. By contrast cows live on ranches that are privately owned. Each rancher takes great effort to maintain the cow population on his ranch because he reaps the benefit of these efforts. Governments have tried to solve the elephant s problem in two ways. Some countries such as Kenya Tanzania and Uganda have made it illegal tokill elephants and sell their ivory. Yet these laws have been hard to enforce and elephant populations have continued to dwindle. By contrast other countries such as Botswana Malawi Namibia and Zimbabwe have made elephants a private good by allowing people to kill elephants but only those on their own property. Landowners now have an incentive to preserve the species on their own land and as a result elephant populations have started to rise. With private ownership and the profit motive now on its side the African elephant might someday be as safe from extinction as the cow. I QUICK QUIZ Why

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