Tragedy of the commons: Difference between revisions
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==Definition== | ==Definition== | ||
'''Tragedy of the commons''' refers to the problem associated with [[defining ingredient:: | '''Tragedy of the commons''' refers to the problem associated with [[defining ingredient::non-excludable good]]s that are also [[defining ingredient::rival good]]s. The problem is as follows: | ||
* Since the good is | * Since the good is non-excludable, everybody uses the good as much as they want. | ||
* However, since the use by one person of the good reduces the quality or quantity of the good for others, the value of the good to everybody reduces. | * However, since the use by one person of the good reduces the quality or quantity of the good for others, the value of the good to everybody reduces. | ||
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Public parks and facilities may undergo the tragedy of the commons. Since these parks are open to all, people use them freely, resulting in their getting overcrowded and misused. | Public parks and facilities may undergo the tragedy of the commons. Since these parks are open to all, people use them freely, resulting in their getting overcrowded and misused. | ||
==Alternatives to apparent tragedy of the | ==Alternatives to apparent tragedy of the commons== | ||
===Free-rider problem=== | ===Free-rider problem=== | ||
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{{further|[[Free-rider problem versus tragedy of the commons]]}} | {{further|[[Free-rider problem versus tragedy of the commons]]}} | ||
The tragedy of the commons is often confused with the [[free-rider problem]]. The free-rider problem can happen to goods that are both [[nonrival good|nonrival]] and [[ | The tragedy of the commons is often confused with the [[free-rider problem]]. The free-rider problem can happen to goods that are both [[nonrival good|nonrival]] and [[non-excludable good|nonexcludable]], such as knowledge goods. For such goods, the problem of overuse resulting in decrease in quality for others does not arise. The problem, rather, is that since everybody can enjoy the benefits of such goods without paying for them, getting people to make the payment necessary to make the initial investment in the good is harder. | ||
==Solutions to the tragedy of the commons== | ==Solutions to the tragedy of the commons== | ||
Revision as of 23:01, 17 June 2009
This article describes a market failure situation, i.e. a situation where the rational pursuit of self-interest by individual agents leads to an outcome that fails a Pareto optimality criterion.|See a list of market failures
Definition
Tragedy of the commons refers to the problem associated with non-excludable goods that are also rival goods. The problem is as follows:
- Since the good is non-excludable, everybody uses the good as much as they want.
- However, since the use by one person of the good reduces the quality or quantity of the good for others, the value of the good to everybody reduces.
Examples
Public parks and facilities
Public parks and facilities may undergo the tragedy of the commons. Since these parks are open to all, people use them freely, resulting in their getting overcrowded and misused.
Alternatives to apparent tragedy of the commons
Free-rider problem
Further information: Free-rider problem versus tragedy of the commons
The tragedy of the commons is often confused with the free-rider problem. The free-rider problem can happen to goods that are both nonrival and nonexcludable, such as knowledge goods. For such goods, the problem of overuse resulting in decrease in quality for others does not arise. The problem, rather, is that since everybody can enjoy the benefits of such goods without paying for them, getting people to make the payment necessary to make the initial investment in the good is harder.
Solutions to the tragedy of the commons
Forcing excludability
One solution to the tragedy of the commons is to enforce excludability. This can be achieved by charging fees that sufficiently measure the extent to which a person's use of a resource reduces its value to others. For instance, fees for entry into public parks and public places can be a way of preventing the overuse of these resources by people who value them less and move them towards people who value them more.
Subsidy from taxes
Public parks are usually maintained by city municipal authorities, which receive their money through revenues collected via taxes. Tax-based subsidies do not, however, solve the problem of people who value the resources less from using the resources.