I had a discussion with a friend about how to efficiently run lakes and ponds in Nebraska so that overfishing does not occur. My friend suggested that the government should administer fishing areas because the profit motive would result in a high likelihood of overfishing and extinction. I pointed out that the profit motive would in fact prevent any species of freshwater fish from ever going extinct.
This sounded counterintuitive to my friend, who said that profit motive and price signaling would lead to the owners of lakes allowing anyone to fish as much as they wanted, since the owners would make more money by admitting any fishers. Subsequently, there would be a shortage of fish in the lake, which would lead to a shortage in the market, which would then lead to higher prices for fish and thus a greater incentive for fishermen to fish the ponds and lakes of Nebraska until there were no fish left.
I had a few things to say about that – never mind the fact that consumers could simply use a substitute product if fish became more expensive. First, the profit motive would cause the owners of lakes and ponds to restrict the amount of fishing. Assuming that businessmen would kill the goose that lays the golden egg is to assume that these businessmen are either remarkably stupid or unwilling to act in their own self interest.
It wouldn’t take a businessman long to figure out that he or she will make more money in the long run by preserving the fish population so that there is always a population of fish available to be fished. Second, in the privatized market for fishing, owners of fishing grounds have a financial incentive to stop poachers – because poachers represent an obstacle to maximizing profits. I pointed out that in the government run scenario, poachers would have an easier time operating because the government would have less of an incentive to stop them (profit motive does not exist) and poachers would have a higher payoff to poaching (normal channels of supply & demand are disrupted).Published in