Hi, need to submit a 1250 words paper on the topic Market failure. Experts opine that there are multiple reasons that have worked behind the extinction of the cod. The most noteworthy reason that work

Hi, need to submit a 1250 words paper on the topic Market failure. Experts opine that there are multiple reasons that have worked behind the extinction of the cod. The most noteworthy reason that worked to this outcome is that the market could not allocate the resource efficiently and the federal government did not have any comprehensive policy for developing the fishing industry in a sustainable manner. This made the fishing zones vulnerable to over fishing and it led to over exploitation of the resource. This creates a negative externality since the ecological balance is lost due to depletion of the natural resources beyond normal replenishing capability of nature. Once faced with the depleting fish reserve, the Government of Canada took reconstructive steps to allow the population of the extinct species to grow and launched a process of strict monitoring of fishing activities in the zone. Background By the first decade of the 16th century, the news spread like fire that the fishing ports along the northern coast of Europe were a rich reserve of different species of marine fish (Emery). By the beginning of the 1990s, the cod fisheries were exploited ravenously. The once-plentiful stock of cod along with several other species had dwindled and reached the brink of becoming extinction. After the stories of cod fisheries spread, foreign fishermen started to catch cod from this zone. They made use of efficient technology highly efficient technology that helped fishermen to locate the position of fishes and harvest exceptionally large amounts of the fish, particularly cod. Stronger vessels, such as technologically advanced trawlers allowed big fishing fleets to visit this zone and from distant places and work on these shores for several months at a stretch. Fishing became an important economic activity and it was left to the market for demand to be supplied with adequate quantities. Hence this led to maximization of the individual private fishermen’s profit objective. This led to catching of fish following the commercial objectives of increasing production efficiency. Overestimation of the magnitude of stock of cod fish in these fisheries by the government officials in the countries of Europe and by some international bodies allowed the harvesting of fish, which crossed the limit of sustainable harvest (“Cod Moratorium”). Quotas were assigned sometimes by these organizations, but, these conformed to the economic requirements of these countries and did not comply with the ecological requirements. The outcome of this phenomenon was a situation of overexploitation of the northern cod. In 1991, the catch rate reduced significantly and also the concentration of large fish reduced (Emery). This led to reduction of fishing activity in the region. The total allowable catch was reduced by the Canadian government in 1991. A two-year moratorium was put on the harvest of northern cod in July in the same year. One year later, in July 1992, the Canadian government shut down the industry for an infinite period of time. Issue: Market failure in Canadian fisheries Economic incentives for overfishing The tragedy of commons A classic example of the tragedy of commons is the case of depleting northern cod stock. High sea fisheries in the pacific are a common resource and do not have any specific owner.