The Tragedy of the Commons

The tragedy of the commons is the overexploitation of a common good by individual, rational actors.

Learning Objective

Describe the tragedy of the commons

Key Points

Common goods are non-excludable and rivalrous.
When individuals act independently and rationally, they may collectively trade long-term benefit for short-term gain.
Enlightened self-interest and government intervention are two ways that the tragedy of the commons may be avoided.

Terms

Common good
Goods which are rivalrous and non-excludable.
Enlightened Self-Interest
The ability for individuals to realize when their actions, collectively, will trade long-term benefit for short-term gain.

Example

The population of tuna may be depleted if fishermen are allowed to catch as much as they want. To make more profit, fishermen must catch more fish, which leads to overfishing. To prevent the tragedy of the commons, governments may implement market-based solutions.

Full Text

Common Goods

Common goods are goods that are rivalrous and non-excludable. This means that anyone has access to the good, but that the use of the good by one person reduces the ability of someone else to use it. A classic example of a common good are fish stocks in international waters; no one is excluded from fishing, but as people withdraw fish without limits being imposed, the stocks for later fishermen are potentially depleted.

Tragedy of Commons

The tragedy of the commons is the depletion of a common good by individuals who are acting independently and rationally according to each one's self-interest. Consider, the example of fish in international waters. Each individual fisherman, acting independently, will rationally choose to catch some of the fish to sell. This makes sense: there is a resource that the fisherman is able to use to generate a profit. However, when a lot of fishermen, all thinking this way, catch the fish, the total stock of fish may be depleted. When the stock of fish is depleted, none of the fishermen are able to continue fishing, even though, in the long run, each fisherman would have preferred that the fish not be depleted. The tragedy of the commons describes such situations in which people withdraw resources to secure short-term gains without regard for the long-term consequences.

Not all common goods, however, suffer from the tragedy of the commons. If individuals have enlightened self-interest, they will realize the negative long-term effects of their short-term decisions. This would be the same as the fishermen realizing that they should limit their fishing to preserve the stock of fish in the long-term.

In the absence of enlightened self-interest, the government may step in and impose regulations or taxes to discourage the behavior that leads to the tragedy of the commons. This would be like the government imposing limits on the amount of fish that can be caught.

Bluefin Tuna Caught in Net

Fish populations are at risk of becoming fully extinct due to overfishing. The Food and Agriculture Association estimated 70% of the world's fish species are either fully exploited or depleted.

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