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Mud dumping from Port AuthorityMarket Failures:
2. Public Goods - the "free rider problem": In this situation, there is inefficiency because there is an incentive for people to rely heavily on the contributions of others. Because the ocean is non-excludable and non-rival, many individuals will fail to pay their share of the abatement costs neccesary to conserve the resource. These individuals are able to do so because there is no way to limit their personal use of the ocean even if they fail to pay. With the lack of funding for abatement efforts, the ocean will once again be subject to the pollution caused by the Port Authority. 3. Asymmetric Information: This market failure occurs when one party has additonal information that the other party is unaware of or misinformed about. In the case of the Port Authority, there have been recent efforts made to classify waste into one of three categories, the first being non-toxic and not harmful to the ocean. However, misinformed members of society do not realize that this material is in no way harmful. As a result, such individuals restrict theri use of the ocean for recreational uses. This asymmetric information has also been detrimental to the local fishing industry, as people fearing pollutants refuse to purchase any fish caught or sold in this area. |