Question

In economics, what is the meaning of the phrase 'the tragedy of the commons?' Goods that are not rivalrous but are excludable are under‐produced by private markets, often with consequences that reduce social welfare. People will overuse or misuse a common resource that is not excludable but is rivalrous. It serves the common good to produce items that are neither rivalrous nor excludable, but profit‑maximizing firms will not produce such products. In market economies products are often similar and common, so the government must actively attempt to create variety in goods and services. In decisions involving intellectual property rights, policy-makers must compromise in order to reach common ground among competing interest groups.

Answer 1

Answer:

People will overuse or misuse a common resource that is not excludable but is rivalrous.

Explanation:

The tragedy of the commons occurs when due to lack of regulation, either self-imposed, or imposed by a central authority, leads to the excessive use of a common good, that does not exclude users from its enjoyment, but that is rivalrous: the use of one user prevents the use of another user, and can lead to depletion.

A classical example of the tragedy of the commons is what happens with global maritime fish stocks. The global stock of fish is virtually non-excludable as long as a person or firm has the means necessary to exploit it: a ship, a net, workers, and so on.

Howerver, the global stock of fish can be depleted, as is the case in some areas of the world. This depletion prevents current and future users from catching and consuming fish.