Tragedy of the commons | Consumer and producer surplus | Microeconomics | Khan Academy

How public resources can be abused

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let's say that we have three small ponds
so this is pond a this is pond B and

this is pond C over here and let's say
that this first pond right over here

it's a privately owned pond it's owned
by it's owned by Al and this pond over

here is owned by Carol is owned by Carol
but this middle pond pond B I guess we

called it to start off with this is
common land or I guess this is a common

pound or this is open to the public open
open to the public open to the public

and let's say that Al and Carol they're
both Fisher I guess Carol would be a

Fisher a fisherwoman they're there they
both like the fish that's how they make

their living and Al and his in his pond
he has fish in there and he does some

fishing in his in his pond but he makes
sure not to over fish because he doesn't

want to deplete the stock of fish yeah
so he fishes just enough that he can he

can pay his bills and whatever else but
not so much that it depletes the fish

and essentially makes them extinct in
his pond so he doesn't want to over fish

and Carol does the same thing
she's got fish in her pond and but and

she uses them to make a living she she
gets them out and sells them and eats

them and whatever else but she's careful
not to over fish because if you over

fished then there wouldn't be fish there
wouldn't be a next generation of fish

but over here in this public pond there
are also fish there are also fish I'll

draw their fish in orange
there are also fish in this public pond

over here they're smiling maybe they
won't be smiling for long and what is

going to happen anyone can go and fish
in this public pond so al might say and

we're just assume we're in a world of
two people obviously the real world has

more than two people I will say okay I'm
going to I'm going to be very careful in

my own pond I'm going to fish just
enough that I don't deplete the fish

there but I can any extra fish I need I
could go over here to this public pond

and fish all I want and I might be
concerned about depletion in the public

pond except for the fact if I'm
concerned about depletion that's still

not going to help
situation because other people might

come and still and still not be so
concerned and so I won't even get the

benefit of the depletion if I hold back
and other people come and deplete the

pond and so when you have this pond that
is open to the public all of the all of

the surrounding people whether it's Al
or Carol or I guess you could have other

people here they would say look I'm
going to fish here I'm going to get some

benefit and even if I over fish my
benefit the benefit of overfishing I'm

going to get on in the near term I'm
going to get all of those fish and then

the cost of that overfishing which is in
the future there won't be as many Fisher

and no fishes and no fish at all that's
going to be spread out amongst everyone

else and so you have the situation where
you have because there's no one I guess

you could say either owning this land or
there's no one protecting this lake or

however you want to describe it you have
there's a a rationale and I want to be

clear rationale does not always mean
good they're rational actors might

decide to over fish decide to over fish
and is essentially by doing that

everyone's going to be worse off they're
going to destroy the productivity of

this pond they're going to destroy the
productivity productivity of the pond of

the pond right over here and this idea
that if there's this common land or

common resource in this case it was a
pond and people can spread out the cost

and they get their benefits directly
you're essentially you have a situation

where that that shared resource can get
abused and this is called the tragedy of

the Commons so this is the tragedy
tragedy of the Commons we're in this in

the example we did here the pond is the
common space that's being that's being

abused and it's a it's especially a
tragedy and I've already hinted at this

already is that even if al decides that
hey you know what I'm going to hold back

a little bit I'm not going to fish so
much because I don't want to deplete it

he'll say but wait if I do that if I do
that other people are going to come and

deplete it so I have no incentive to
hold back and so other people are also

going to have the same logic and then
this thing is going to get over fished

here and the first classic example of
tragedy

where the example was first given was
common grazing land same exact idea if

this was private grazing land over here
where I can keep my cows and my sheep

and this is private grazing land over
here where someone else has their Colin

sheep but this over here is literally a
Commons where anyone can graze their cow

and sheep then just like the fishing
huge incentive for people to let their

cow and sheep maybe over graze the land
destroy the land make it not sustainable

but the costs of it are going to be
shared by everyone else and the benefit

of over grazing at least in the near
term you the the the person who's over

grazing is going to get from it and you
might even say I'm not even the one over

grazing it's all of us collectively over
grazing so you don't blame me now what

is the solution to the tragedy of the
Commons how does a government or

jurisdiction or a group of people avoid
this type of destruction of a resource

well one way that you could do is you
could make this somehow into private

land so if that was owned by the
government it could sell it auction it

off to private people who could then
sell access to this or if the government

does retain control of it it could sell
permits to the land so in this situation

you could sell you could sell permits so
it could figure out hey if someone

fishes responsibly in a given day
they're going to get I don't know $200

or value by doing this so we're going to
make a permit cost I don't know one

hundred and fifty dollars so someone
still has an incentive to do it but that

will also limit the amount of fishing
that can be there and you can have some

you know conservationists that make sure
that the that not too many permits are

given are given for this space over you
and we see that happening if you wanted

to go hunting
there are permits you need to have if

you want to if you want to go fishing in
a lot of places there are permanent to

have if you want to go camping in a lot
of places there are permits because you

could even over a camping area if too
many people are walking there too much

trash is there it could ruin the
campgrounds and so this tragedy the

Commons the best way or the way most
often seen is through this the best way

of preventing the tragedy of Commons is
through some type of a permitting

process