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Public Goods and
Common Resources
Common Resources
• Common resources
• Not excludable
• Rival in consumption
2
Common Resources
• The tragedy of the commons
• is a parable that illustrates why common resources get used
more than is desirable from the standpoint of society as a whole.
When one person uses a common resource, he or she diminishes another person’s
enjoyment of it.
Common resources tend to be used excessively when individuals are not charged
for their usage.
This creates a negative externality
3
Common Resources
• The tragedy of the commons
• Government can solve the problem
• Regulation or taxes to reduce consumption of the common
resource
• Turn the common resource into a private good
4
Common Resources
• Some important common resources
– Clean air and water
– Congested roads
– Fish, whales, and other wildlife
5
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