Tragedy of the Commons : The tendency of individual incentives not to align with the maintenance needs of shared, nonexcludable resources, causing those resources

Tragedy of the Commons: The tendency of individual incentives not to align with the maintenance needs of shared, nonexcludable resources, causing those resources to be overused and undermaintained. This is from the video “Tragedy of the Commons” in the Principles of Microeconomics course.



Common resources are those that are nonexcludable, but rival. Unlike public goods, common resources get depleted as more people use them.

Tuna in the ocean are an example of a common resource. The tuna are nonexcludable because there are no property rights to fish in the ocean. No one can legally be prevented or excluded from fishing for tuna, at least outside of a nation's territorial waters. Tuna, however, are rival. One more tuna caught leaves one less tuna for everyone else. Nonexcludable but rival resources often lead to a tragedy of the commons, a destruction of the common resource. In the case of tuna, that means the collapse of the fishing stock.

More generally, the tragedy of the commons is the tendency of any resource that is unowned, and hence nonexcludable, to be overused and undermaintained. In the case of tuna, it's the stock of fish that's the common resource, and the stock is being rapidly depleted. Since 1960, the tuna catch has decreased by 75%. Atlantic bluefin tuna, especially, are becoming endangered. Now, nobody wants this. Tuna consumers don't want it and neither do the tuna fishermen, whose way of life is under threat.

So why is it happening? You might think the answer is obvious. Tuna is delicious! The demand for sushi is up. But that can't be the whole story. Chicken is also delicious, but chickens are in no danger of going extinct. So why the difference? Well, let's compare the incentives of Frank Perdue, the famous chicken entrepreneur, with the incentives of a tuna fisherman. If Frank Perdue harvests too many chickens today, he won't have any left to sell tomorrow, so he'll be out of business. Perdue has an incentive to preserve the chicken stock, to maintain it, so that he can continue in business into the far future. When Perdue sells less today, that's costly. But he gets the benefit of selling more tomorrow.

On the other hand, consider a tuna fisherman. He knows that the stock of tuna is going extinct, but does he have an incentive to conserve? No. If he conserves and fishes less today, that doesn't leave more tuna for him tomorrow. It leaves more tuna for another fisherman to catch today. The tuna fisherman has no incentive to conserve, because he doesn't own the stock of fish the way Frank Perdue owns the stock of chickens. So, the tuna fisherman doesn't have an incentive to maintain the stock, and as a result, we get the tragedy of the commons. The tuna stock collapses. There's no more sushi and no more jobs for fishermen. That's a tragedy.

Ask a Question

Please register or login to ask a question