In this video, we take a look at common goods. Common resources are nonexcludable but rival. For instance, no one can be excluded from fishing for tuna, but they

In this video, we take a look at common goods. Common resources are nonexcludable 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. Nonexcludable 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. Why does this happen? And how can we solve this problem? Like we’ve done so many times throughout this course, let’s take a look at the incentives at play. We also discuss Nobel Prize Winner Elinor Ostrom’s contributions to this topic.

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Economists would be against this rule because this rule would decrease total wealth. It would decrease the total value of resources. Economists want to let each resource be used in its most profitable direction, and so, to maximize total value. Imagine that Jimmy B runs over a tree with his car and breaks the tree. Imagine Jimmy B is a brain surgeon. If a rule forced Jimmy to plant saplings himself, then he would waste his afternoon in the field doing something less valuable than a brain surgery.
Of course, we might force Jimmy to pay someone to plant one or two trees. But how many exactly? We need to look at the value of trees compared to anyone's time and other resources employed in planting trees.
In other words, all other things equal, it might be good to have the tree replaced. But someone has to do it, and sometimes everyone has better, more valuable things to do that planting the broken tree.
Inthat case, a rule that aimed for efficiency, should not force anyone to plant it back.
Sometimes it is better to just leave things unrepaired. Namely, when the cost of repairing exceeds the benefit.

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