Common Resource

… a core concept in Economic Analysis and Atlas102

Click for MRU video

Click for MRU video

Concept description

A common resource is an non-excludable but rival good; that is, a good that people cannot be prevented from using but where one person’s consumption of the good diminishes another person’s consumption of it. See Non-excludable Good and Rival Good.

Alex Tabarrok (reference below, video on right) describes how common resources can lead to the Tragedy of the Commons.

Tabarrok says:

“Common resources are non-excludable but rival. For instance, no one can be excluded from fishing for tuna, but they are rival – for every tuna caught, there is one less for everyone else. Non-excludable but rival resources often lead to what we call a “tragedy of the commons.” In the case of tuna, this means the collapse of the fishing stock. Under a tragedy of the commons, a resource is often overused and under-maintained.”

CommonResources

Tabarrok explores three methods for solving the common resource problem.

  1. Command and control
  2. Cultural norms – sophisticated procedures can develop, particularly with small and stable goods
  3. Creating property rights – such as New Zealand’s Individual Transferable Quota for fishing
Practice questions

From http://www.mruniversity.com/node/3136001, accessed 10 May 2016.

  1. At some restaurants and grocery stores, you can buy bison burgers made from farm-raised bison. Is this good news or bad news if we want more bison around?

Atlas topic, subject, and course

Public Goods and Commons Problems (core topic) in Economic Analysis and Atlas102 Economic Analysis.

Source

Alex Tabarrok, The Tragedy of the Commons (11-minute video), Marginal Revolution University, at http://www.mruniversity.com/courses/principles-economics-microeconomics/tragedy-of-the-commons-examples-economics, accessed 10 May 2016.

Page created by: Ian Clark, last modified 109 May 2016.

Image: Alex Tabarrok, Minute 0:15 of The Tragedy of the Commons (11-minute video), Marginal Revolution University, at http://www.mruniversity.com/courses/principles-economics-microeconomics/tragedy-of-the-commons-examples-economics, accessed 10 May 2016.