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The Commons
Suppose that the table below shows the relationship
between the number of cows using a large meadow and the
amount of milk that can be produced.1 If one
person controlled access to this land, it would be foolish
for him to allow more than 400 cows to graze there. But when
the land is open to all, 500 cows may end up grazing if each
of the many herders tries to do what is best for himself.
Thus, if there are 100 herders, each with four cows, each
cow will produce seven gallons of milk. If one herder adds
an extra cow, the total production of milk does not
increase, but the production from his herd will. He will
have five cows, and each produces 6.98 gallons (after
ignoring all digits beyond the second to the right of the
decimal point). The fifth cow adds 6.98 gallons of milk.
However, each of the four cows he already has will produce
.02 gallons less, so the net gain to the herder will be 6.9
gallons. He will not take into consideration the drop in
production of .02 gallons from each of the 396 cows that he
does not own. Because each herder has the same set of
incentives, it may easily happen that there will be 500 cows
grazing on the land. Clearly there is an unintended
consequence here, and it is of the by-product type. Each
herder ignores the effects that his cows have on the
productivity of cows he does not own.
Production on the Commons
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Number of Cows
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Output of Milk (Gallons)
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100
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1000
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200
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2000
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300
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2600
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399
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2799
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400
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2800
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401
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2800
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500
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2700
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600
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2600
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The story above is an example of the problem of the
commons. The commons exist whenever there is a
resource--such as grazing land, a hunting area, or fishing
grounds--which is open to all. The problem of the commons
refers to the absence of any automatic mechanism or
incentive to prevent the overuse and depletion of the
commonly-held resource. The logic of the problem of the
commons is behind many ecological problems, from
deforestation to depletion of the ozone layer. There will
further discussion of this topic in later pages of
CyberEconomics.
1 We shall ignore all other
outputs, such as meat, leather, and fuel. The technical name
for a table which shows output depending on inputs is
"production function."
Copyright
Robert Schenk
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