the tragedy of the commons is a specific problem which is emblematic of a broader kind of problem Commons are plots of land which are not owned by anyone and so they can be used by anyone Farmers would often let their livestock graze on these lands they would let their sheep onto the fields and the Sheep would eat the grass saving the farmer a lot of money in feed but their neighbor also wanted to take advantage of this free land and so do all the other farmers in the area since there's no way to exclude anyone from using the commons it ends up being overused to the point of being ruined soon there's no grass and the land is so trampled it isn't growing back either it's a tragedy because this once great resource is now destroyed because no one had an incentive to protect it the commons are an example of what we economists refer to as a common Resource as the name would suggest but we can broaden our perspective to see how common resources fit in with other kinds of goods Goods can be excludable or non-excludable and they can be rival or non-rival let's explain what those mean by going through them the most common type of good is a private good private goods are both rival and excludable an example is a loaf of bread a loaf of bread is rival because if I eat it it means you can't eat it if one person consumes a private good it's not available to be consumed by someone else at the same time a loaf of bread is also excludable because the producer of the brat is able to withhold it from anyone until they pay we can compare that to common resources the commons where we let our sheep graze are an example of a common resource common resources are rival but they're non-excludable if my sheep consume the grass on the commons that grass is gone and cannot be consumed by your sheep so it is a rival good but it's non-excludable there's no way to prevent either of us from letting our sheep graze on the grass instead we could have a club good on our hands Club goods are non-rival but they are excludable streaming services are an example of a club good if I watch a movie on Netflix that doesn't prevent you from watching it too the product is non-rival because my consumption doesn't mean that you can no longer consume the exact same thing at the exact same time however Netflix can exclude people from accessing the movie unless they pay so the product is excludable public goods are the most difficult class of goods for markets public goods are non-rival and also non-excludable lighthouses are the classic example of a public good before ships had better navigation equipment there was a real risk that they would run right into Shore if there was a lot of fog or weather blocking their site lighthouses were built along rocky shores and their light would signal to ships that they were near the shore this is non-rival because if your ship benefits from seeing the light that doesn't reduce the amount of light that my ship can benefit from as well everyone benefits but it's also non-excludable once we turn the light on there's no way to say that only ships who paid for the lighthouse are able to see the light While others can't see it the National Defense is another example of a public good it's non-rival when I enjoy the benefits of the U.S defending its territory against hostile Powers it does not reduce the benefits still available for you to enjoy my consumption of the National Defense does not reduce what is left over for everyone else to consume but it's also non-excludable even if I pay nothing to support the National Defense there's no way to exclude me from enjoying the benefits of it same for you as you might guess common resources and public goods tend to be products the government ends up producing or regulating that's because non-excludable goods are under supplied by the market because people can benefit from them without paying their cost we call this the free rider problem it's easy to see that if the government did not collect taxes for the National Defense we probably wouldn't have one perhaps there would be some Regional defense programs and we do see private security for neighborhoods and such but it's too easy to free ride on a National Defense that if we weren't required to pay no one would if we relied on the free market we probably wouldn't have enough roads or bike Lanes or Parks or mass transit systems and that is because it's too easy to get away with using the product without paying for it the goods are non-excludable another example of the tragedy of the commons comes with fishing anyone can go out and Fish on the open ocean no nation has authority over the ocean and there's no way to exclude some fissures and not others this has been bad news for the southern bluefin tuna which over the past many decades has been fished to near Extinction these are very large fish and there's such a delicacy in sushi that a single fish connect fifty thousand dollars for the person who catches it because this resource is non-excludable the market incentives have led to a deeply sub-optimal outcome a tragedy of the commons the problem of course is a lack of property rights because no one has property rights over the oceans or over the bluefin tuna no one has an incentive to maintain them and keep the resource sustainable in New Zealand they solve this problem by creating property rights for the fish in their territory all commercial fishermen have to purchase an individual transferable quota which allows them to catch a limited number of fish if they end up catching fewer they can sell the remainder of their quota to another fisherman but the overall Market is capped to a certain number of fish this allows officials to set quotas so that the population of fish is always at a sustainable level this program has been so successful in keeping the Fisheries sustainable that has been replicated all over the world in fact when it comes to non-excludable Goods as well as negative and positive externalities the problem really boils down to a difficulty in assigning the property rights to something if someone owned the lake they would charge the factory in order to pollute it in vast swaths of the economy there are these frictions which prevent the problem from being solved by the market