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Theory of the “Commons”. Discussing 3 classic papers on Common Property Resources, Public Goods , Easy Riders Richard Cornes and Todd Sandler. On Commons and Tragedies The American Economic Review, 73(4):787 – 92, September 1983. Richard Cornes and Todd Sandler

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Theory of the commons
Theory of the “Commons”

Discussing 3 classic papers on

Common Property Resources, Public Goods , Easy Riders

Richard Cornes and Todd Sandler.

On Commons and Tragedies

The American Economic Review, 73(4):787 – 92, September 1983.

Richard Cornes and Todd Sandler

Easy Riders, Joint Production and Public Goods

The Economic Journal, 94: 580-98, September 1984.

H. Scott Gordon

Economic Theory of a Common-Property Resource: The Fishery

The Journal of Political Economy, 62 (2):124-142, April 1954.


H scott gordon economic theory of a common property resource the fishery
H. Scott Gordon: Economic Theory of a Common-Property Resource - The Fishery

  • Overexploitation of natural resources happens because of the absense of economic rent

  • Renewable (fish, forest) vs non-renewable (oil) resources


Cornes sandler on commons and tragedies
Cornes & Sandler: On Commons and Tragedies Resource - The Fishery

  • Market failures are often tragedies of the commons

    • AP() = rental rate ≠ MP()

  • Normally environmental exploitation follows Nash Eqm

  • Nash & Pareto Equlibria are contrasted

  • This paper uses:

    • non-Nash behavior (non-zero conjectures)

    • Technology functions use (fish, fishing grounds, fishing vessels)

  • Degree of exploitation depends on conjecture and technology


Cornes sandler easy riders joint production public goods
Cornes & Sandler: Easy Riders, Joint Production & Public Goods

  • Standard propositions about public goods

    • Suboptimality increases with size

    • Stability of N Eqm depends on the sign on the income effect

    • Nash behavior is always inefficient for public goods

    • Identical individuals provide symmetric eqm

  • Paper states that these propositions break down for goods with private & public features.


Nash equlibrium
Nash Equlibrium Goods

When the second agent’s reaction generates the same action from the initial agent that stimulated the reaction.

In a 2 person non-cooperative game, this would be the intersect of optimal strategies of both parties.

Eg. 2 agents supplying bottled water from a free well would end up servicing 1/3 each.


Pareto equilibrium
Pareto Equilibrium Goods

Resource A

PPF showing Pareto Eqm

Any changes would make someone worse off

Resource B


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