Final answer:
Well-defined property rights can decrease overfishing and resource depletion by incentivizing property owners to manage their resources sustainably. This is aligned with the theories of economist Ronald Coase, who emphasized the importance of property rights in managing externalities and promoting environmental sustainability.
Option 'd' is the correct.
Step-by-step explanation:
The question addresses the potential impacts of well-defined property rights on the efficiency of fishing activities in a village's lake. According to economic theory, particularly the insights provided by Ronald Coase, better-defined property rights can be crucial in balancing economic activity with environmental concerns, such as pollution and resource depletion. In the context of fishing, well-defined property rights can lead to several outcomes.
Primarily, if fishermen have clear property rights to parts of the lake or to a certain amount of catch, they have an incentive to manage their portion sustainably. This is because they directly bear the costs of overfishing and benefit from preserving the fish population. Therefore, answer B) Decrease overfishing and resource depletion is most closely aligned with the impact of well-defined property rights in this scenario.
Additionally, when property rights are established, owners are likely to invest more in their property to maintain or increase its value. In the case of the lake, this might entail fishermen or the village investing in restocking the lake, enforcing fishing limits, or other conservation efforts that further support the aim of sustainability.
However, clear property rights are not as closely related to increasing competition (A), encouraging more activities (C), or reducing the number of boats (D) directly, as these outcomes can be influenced by a variety of factors, such as market demand, regulations, or individual preferences. Nonetheless, better-managed resources could indirectly lead to a more vibrant and competitive market due to a higher-quality fishing environment or limit the number of boats to sustain the fish population.