Difference between revisions of "Tragedy of the commons"

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The problem of the commons refers to how a publicly available resource becomes run-down because no one has an incentive to maintain or improve it.  An example of this problem is a public park that becomes unsafe.
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The '''problem of the commons''' (also called the '''tragedy of the commons''') refers to how a publicly available resource can become run-down because no one has an [[incentive]] to maintain or improve it.
  
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For example, imagine a large pasture where any farmer is allowed to graze his cattle. If a farmer wants to produce more milk, he must weigh the [[benefit]] of adding a new cow (more milk) to the [[cost]] (consuming more grass). For the individual farmer, the benefits of adding a cow, which he shares only with himself, far outweigh the costs, which are shared amongst all the farmers. If every farmer makes the same self-interested decision, eventually there will be too many cows for the pasture, and it will be destroyed. All of the farmers will then be without a place to graze their cattle, and all are worse off for their decision.
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==Examples==
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The problem of the commons is not just a theoretical concept. Any time where a group uses a [[resource]] which is owned by all (or by no one) the problem of the commons usually occurs. Some examples are:
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*Commonly owned land
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*Open commercial [[fishing]] waters
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*Global [[pollution]]
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==Solutions==
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One solution to the problem of the commons is to [[privatize]] the pasture, that is, give ownership of the pasture to one or more of the farmers. If the farmer owns the pasture he no longer shares the cost of adding cows with any one. Now a self-interested decision made by the farmer no longer leads to his own destruction. This approach has been taken to save many common areas, such as pastures and fishing waters. Applying the idea of a problem of the commons can even be used to reduce pollution.
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==External Links==
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*The Concise Encyclopedia of Economics. [http://www.econlib.org/library/Enc/TragedyoftheCommons.html ''The Tragedy of the commons'']
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[[Category:Economics]]
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[[Category:Game theory]]
 
[[Category:Political doctrines]]
 
[[Category:Political doctrines]]
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[[Category:Politics]]

Revision as of 02:33, 2 August 2007

The problem of the commons (also called the tragedy of the commons) refers to how a publicly available resource can become run-down because no one has an incentive to maintain or improve it.

For example, imagine a large pasture where any farmer is allowed to graze his cattle. If a farmer wants to produce more milk, he must weigh the benefit of adding a new cow (more milk) to the cost (consuming more grass). For the individual farmer, the benefits of adding a cow, which he shares only with himself, far outweigh the costs, which are shared amongst all the farmers. If every farmer makes the same self-interested decision, eventually there will be too many cows for the pasture, and it will be destroyed. All of the farmers will then be without a place to graze their cattle, and all are worse off for their decision.

Examples

The problem of the commons is not just a theoretical concept. Any time where a group uses a resource which is owned by all (or by no one) the problem of the commons usually occurs. Some examples are:

Solutions

One solution to the problem of the commons is to privatize the pasture, that is, give ownership of the pasture to one or more of the farmers. If the farmer owns the pasture he no longer shares the cost of adding cows with any one. Now a self-interested decision made by the farmer no longer leads to his own destruction. This approach has been taken to save many common areas, such as pastures and fishing waters. Applying the idea of a problem of the commons can even be used to reduce pollution.

External Links