Course: Microeconomics > Unit 9Lesson 4: The four types of goods: private goods, public goods, common resources, and natural monopolies
Tragedy of the commons
The "Tragedy of the Commons" occurs when individuals overuse a shared resource for personal gain, leading to depletion. In the video, overfishing in a public pond illustrates this concept. A solution is implementing a permitting system to limit resource use and ensure sustainability. This idea applies to various shared resources like grazing land and campgrounds. Created by Sal Khan.
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- The solution of issuing permits leads to large scale corruption, the most prominent example being India. Wherever permits or licensing was scrapped in favor of privatization, the situation improved. Does that mean that the public pond should never exist, and all ponds are supposed to be private right from the start?(9 votes)
- Permits are issued everywhere, not just in protecting public resources. Corruption has its own causes, notably a lack of transparency, a history of corruption, and a culture of silence.(31 votes)
- In your opinion / observation, is abuse rooted in greed or misunderstanding?(4 votes)
- Sometime the misunderstanding acts as a driver while greed fuels it while at other times its purely greed. So the answer to abuse is both greed and misunderstanding but not necessarily in that order(7 votes)
- In case of resources available in areas that are not subject to jurisdiction like the high seas, governments can not sell permits as they have no jurisdiction and authority in those areas, so how do we mitigate the tragedy of commons in this case?(7 votes)
- That is the reason why United Nations and other such world Organisations have come into force say for example banning on fishing of Whales, hope I am right(4 votes)
- I guess tragedy of the common is similar to the free rider problem?(6 votes)
- This is the difference between a public good and a common good. The commons are a common good (nonexcludable and rivalrous) and a public good is excludable and rivalrous.
Common goods cannot be closed off, but my use of it can harm yours. This leads to overuse, as illustrated in the video.
Public goods are available to all but my use does not harm yours. Therefore, public goods will not be overused from the point of view of other consumers in the market.(4 votes)
- Isn't this an explanation for the downfall of our public school systems in the US?(0 votes)
- No, that's not very analogous. To be a Tragedy of the Commons, you need to be able to over-consume an un-owned resource. You can't consume an unlimited quantity of government-run schooling and use it all up.(11 votes)
- Why not sell the those common lands, so that they become privatised, and thus better taken care off? Selling permits can be abused, the people who are selling those permits could be corrupted to sell more to the highest bidder, even tough nature can only sustain a certain amount of exploitation?(2 votes)
- An issue I see with privatisation is a private body has incentive to protect one resource - while utterly disregarding others. The extreme example would be the fishing pond going for sale, and then being bought by a company using it to mine resources. The original natural productivity of the pond would be utterley destroyed - there may be another economic benefit, but it may be only with quite considerable negative externalities. There are rational actors who would strip assets and ditch the now ditched land.(6 votes)
- Is permits same as License or it something else?(3 votes)
- The best presentation I've heard of this problem is here, in a great lesson on the Prisoner's Dilemma:
- Is this an example of a classic payoff matrix or what?(2 votes)
- can i download for teaching purposes(1 vote)
let's say that we have three small ponds so this is pond a this is pond B and this is pond C over here and let's say that this first pond right over here it's a privately owned pond it's owned by it's owned by Al and this pond over here is owned by Carol is owned by Carol but this middle pond pond B I guess we called it to start off with this is common land or I guess this is a common pound or this is open to the public open open to the public open to the public and let's say that Al and Carol they're both Fisher I guess Carol would be a Fisher a fisherwoman they're there they both like the fish that's how they make their living and Al and his in his pond he has fish in there and he does some fishing in his in his pond but he makes sure not to over fish because he doesn't want to deplete the stock of fish yeah so he fishes just enough that he can he can pay his bills and whatever else but not so much that it depletes the fish and essentially makes them extinct in his pond so he doesn't want to over fish and Carol does the same thing she's got fish in her pond and but and she uses them to make a living she she gets them out and sells them and eats them and whatever else but she's careful not to over fish because if you over fished then there wouldn't be fish there wouldn't be a next generation of fish but over here in this public pond there are also fish there are also fish I'll draw their fish in orange there are also fish in this public pond over here they're smiling maybe they won't be smiling for long and what is going to happen anyone can go and fish in this public pond so al might say and we're just assume we're in a world of two people obviously the real world has more than two people I will say okay I'm going to I'm going to be very careful in my own pond I'm going to fish just enough that I don't deplete the fish there but I can any extra fish I need I could go over here to this public pond and fish all I want and I might be concerned about depletion in the public pond except for the fact if I'm concerned about depletion that's still not going to help situation because other people might come and still and still not be so concerned and so I won't even get the benefit of the depletion if I hold back and other people come and deplete the pond and so when you have this pond that is open to the public all of the all of the surrounding people whether it's Al or Carol or I guess you could have other people here they would say look I'm going to fish here I'm going to get some benefit and even if I over fish my benefit the benefit of overfishing I'm going to get on in the near term I'm going to get all of those fish and then the cost of that overfishing which is in the future there won't be as many Fisher and no fishes and no fish at all that's going to be spread out amongst everyone else and so you have the situation where you have because there's no one I guess you could say either owning this land or there's no one protecting this lake or however you want to describe it you have there's a a rationale and I want to be clear rationale does not always mean good they're rational actors might decide to over fish decide to over fish and is essentially by doing that everyone's going to be worse off they're going to destroy the productivity of this pond they're going to destroy the productivity productivity of the pond of the pond right over here and this idea that if there's this common land or common resource in this case it was a pond and people can spread out the cost and they get their benefits directly you're essentially you have a situation where that that shared resource can get abused and this is called the tragedy of the Commons so this is the tragedy tragedy of the Commons we're in this in the example we did here the pond is the common space that's being that's being abused and it's a it's especially a tragedy and I've already hinted at this already is that even if al decides that hey you know what I'm going to hold back a little bit I'm not going to fish so much because I don't want to deplete it he'll say but wait if I do that if I do that other people are going to come and deplete it so I have no incentive to hold back and so other people are also going to have the same logic and then this thing is going to get over fished here and the first classic example of tragedy where the example was first given was common grazing land same exact idea if this was private grazing land over here where I can keep my cows and my sheep and this is private grazing land over here where someone else has their Colin sheep but this over here is literally a Commons where anyone can graze their cow and sheep then just like the fishing huge incentive for people to let their cow and sheep maybe over graze the land destroy the land make it not sustainable but the costs of it are going to be shared by everyone else and the benefit of over grazing at least in the near term you the the the person who's over grazing is going to get from it and you might even say I'm not even the one over grazing it's all of us collectively over grazing so you don't blame me now what is the solution to the tragedy of the Commons how does a government or jurisdiction or a group of people avoid this type of destruction of a resource well one way that you could do is you could make this somehow into private land so if that was owned by the government it could sell it auction it off to private people who could then sell access to this or if the government does retain control of it it could sell permits to the land so in this situation you could sell you could sell permits so it could figure out hey if someone fishes responsibly in a given day they're going to get I don't know $200 or value by doing this so we're going to make a permit cost I don't know one hundred and fifty dollars so someone still has an incentive to do it but that will also limit the amount of fishing that can be there and you can have some you know conservationists that make sure that the that not too many permits are given are given for this space over you and we see that happening if you wanted to go hunting there are permits you need to have if you want to if you want to go fishing in a lot of places there are permanent to have if you want to go camping in a lot of places there are permits because you could even over a camping area if too many people are walking there too much trash is there it could ruin the campgrounds and so this tragedy the Commons the best way or the way most often seen is through this the best way of preventing the tragedy of Commons is through some type of a permitting process