Question

Early industrial societies used whale oil in oil lamps and for lubricating machines. The composition of oil varied across whale species. For example, sperm whales were targeted because their oil commanded a higher price in the market. Whaling boomed in the 1800s. You can assume that the primary focus of commercial whaling was to recover oil.

a. Develop a simple graphical model to describe the growth and decline of whaling in the US over the period 1800 through 1900.

b. Describe the factors that led to the growth and decline of commercial whaling over the period 1800-1900. Provide evidence that supports the model provided in (a) above. Your research should consider the impact of technology, markets, prices, rules governing access, attributes of the resource, and other factors you might uncover.

c. Using (a) and (b) test the veracity of the “Demsetz hypothesis”: In a situation of unrestricted access to a resource, private property rights in that resource will emerge if the net benefits are positive. In other words, did private property rights emerge? If not, why not? Justify your answer.