Traditional Commons

The Commons : 

The Commons And the Tragedy thereof

Traditional Commons : 

Traditional Commons The word derives from the unincorporated land in and around towns that everyone was free to use. Farmers could feed their sheep, people could cut wood, or even live on it.

Traditional Commons : 

Traditional Commons A pasture allows for a certain amount of grazing to occur each year without the core resource being harmed.

Slide 4: 

We still refer to the public square in small towns as “the commons.”

Rivalry : 

Rivalry Some commons are rivalrous. This means that an individual’s use of the common-pool resource subtracts from other’s use.

Excludability : 

Excludability Most Commons are non-excludable.

Slide 7: 

Two dimensions: rivalry and excludability

Slide 9: 

Two dimensions: rivalry and excludability

Slide 11: 

Two dimensions: rivalry and excludability

Slide 13: 

Two dimensions: rivalry and excludability

Slide 15: 

Two dimensions: rivalry and excludability

Slide 17: 

Two dimensions: rivalry and excludability

Slide 19: 

Two dimensions: rivalry and excludability

Slide 21: 

Two dimensions: rivalry and excludability

Slide 23: 

Two dimensions: rivalry and excludability

Slide 25: 

Two dimensions: rivalry and excludability

Slide 27: 

Two dimensions: rivalry and excludability

Slide 29: 

Two dimensions: rivalry and excludability

Slide 31: 

Two dimensions: rivalry and excludability

Slide 33: 

Two dimensions: rivalry and excludability

The Tragedy of the Commons : 

The Tragedy of the Commons

Rivalry : 

Rivalry In case of excessive grazing, however, the pasture may become more prone to erosion and eventually yield less benefit to its users.

Slide 38: 

Imagine a field of grass shared by 6 farmers, each with one cow…

Slide 39: 

A few facts: Each cow currently produces 20 liters of milk per day The carrying capacity of the commons is 8 cows. For each cow above 8, the milk production declines by 2 liters (due to overgrazing, there is less grass for each cow: less grass, less milk!). 20 liters 20 liters 20 liters 20 liters 20 liters 20 liters Total daily milk production for the commons: 120 liters

Slide 40: 

Do the farmers sit back and stay at 6 cows? Not if they are individual profit maximizers (here simplified as milk production maximizers) 20 liters 20 liters 20 liters 20 liters 20 liters 20 liters Total daily milk production for the commons: 120 liters (6 cows)

Slide 41: 

Do the farmers sit back and stay at 6 cows? Not if they are individual profit maximizers (here simplified as milk production maximizers) 20 liters 20 liters 20 liters 20 liters 20 liters Total daily milk production for the commons: 140 liters (7 cows) 40 liters “I’ll get another cow”

Slide 42: 

We are now at the carrying capacity -- do they stop? No. 20 liters 20 liters 20 liters 20 liters Total daily milk production for the commons: 160 liters (8 cows) 40 liters 40 liters “Then I’ll get another cow too”

Slide 43: 

They are now at the maximum total milk production. But do they stop? No… 18 liters 18 liters 18 liters Total daily milk production for the commons: 162 liters (9 cows) 36 liters 36 liters “I’ll get another cow” 36 liters

Slide 44: 

32 liters 16 liters 16 liters Total daily milk production for the commons: 160 liters (10 cows) 32 liters 32 liters 32 liters “My cow is now less productive, but 2 will improve my situation”

Slide 45: 

28 liters 14 liters Total daily milk production for the commons: 154 liters (11 cows) 28 liters 28 liters 28 liters “I’ll get another cow” 28 liters

Slide 46: 

24 liters Total daily milk production for the commons: 144 liters (12 cows) 24 liters 24 liters 24 liters 24 liters “Well, everyone else is getting one, so me too!” 24 liters

Slide 47: 

20 liters Total daily milk production for the commons: 130 liters (10 cows) 30 liters 20 liters “Well, I can still increase milk production if I get a third cow” 20 liters 20 liters 20 liters

This could go on for a while in a vicious downward cycle… : 

This could go on for a while in a vicious downward cycle…

Slide 49: 

Current situation Social maximum Outcome based on ind. Max.

Slide 50: 

Viewed graphically Maximum total production for commons: 162 liters/day Yet individual farmers will continue to add cows until there are 15 cows on the commons Current level Gain (or Loss) to Individual Farmer for adding one cow Total Milk Production per Day for all the cows combined

Slide 51: 

Viewed graphically Maximum total production for commons: 162 liters/day Gain (or Loss) to Individual Farmer for adding one cow Total Milk Production per Day for all the cows combined GAP Socially Optimal Result of individual behavior loss in output

And questions? : 

And questions?

The American Ethic : 

The American Ethic Freedom Individualism “Laissez Faire” Suspicious of communal solutions or collective action (i.e., communism and socialism)

Free Markets need: : 

Free Markets need: Little gov’t regulation Strong protection for property (inforced by police and courts) Commodification of goods so that they can be traded Private self-interest of consumers