2.3 Common Pool Resources Flashcards
what are private goods
rivalrous and excludable
what are common pool resources
non-excludable and rivalrous
market failure that arises from common pool resources
- depletion of resources
- over-use of good
what are public goods
non-excludable and non-rivalrous
market failure that arises from public goods
missing market d(due to the free-rider problem)
another name for common pool resources
common access resources
what does rivalrous mean
consuming something uses it up meaning it is no longer available for someone else to use
what does excluability mean
it is possible to stop someone from enjoying/receiving the benefits of a good
how are excluable goods rationed
the price mechanism
examples of common pool resources
- fishing in oceans/rivers/lakes
- clean air and water
- stable climate
- foraging (e.g. acorns in korea)
- common grazing land
why are common pool resources degraded/depleted?
they are non-excludable and thus don’t have a market which rations their use and no price mechanism to take price into consideration
example of depeltion of common pool resources
- overfishing (threat to sustainability of fish stocks and bio diveristy)
- overgrazing (soil eroision & loss of grazing land)
- overforaging (loss of food for wildlife & disruption of biodiversity)
- drought & pollution
- climate change
name for depletion of common pool resources
tragedy of the commons
how does the tragedy of the commons lead to market failure?
because of the depletion of resources and individual long term needs are not met
solution to depletion of common pool resources
collective self-governance
what is collective self-governance
the idea that communities may be able to develop their own systems and mechanisms for managing and limiting resources because their own well-being depends on preserving resuources
example that proves collective self-governance
ostrom’s research shows that collective self-governance is effective if these conditions are met:
(1) users of the resources haev effective methods of communication
(2) there is a clear bounary to the area being managed (e.g. lake or wood)
the bigger the area (collective slef-governance)
the more difficult communication becomes
insights of ostrom’s research
- shows non-excludability isnt a poroblem if users cna cooperate and communicate
- shows that gov intervention may not be needed
- shows that individuals are able to put aside short-term self-interests in order to achieve collective ling-term interests
limitations of ostrom’s research
doesn’t provide hope for natural resources where there are no clear boundairies (e.g. oceans, climate change)
possible gov intervention to manage use of common access resources
- laws (quotas to limit fisherman, license to limit fishermen, restrictions on the catching of egg-carrying female libsters, foraging illegal)
-international compliannce/agreements (e.g. 1988 ban on whaling)
examples of public goods
- national defence
- lighthouses
- street lighting
- police
- flood control
market failure in public goods
there is a missing market because no profit-maxmising firm would be willing to sell a god it cannot sell at some price
solutions to market failure of public goods
- gov provision
- finding ways to make the public good excludable
- contracting to the private sector
example of making public goods excludable
- toll roads
- baoting locenses
- road taxes
government provision in public goods
using tax revenue to finance the direct provision by the gov
what are quasi public goods
- non rivalrous (like public goods)
- exclduable (like rivate goods)
example of quasi public goods
bridges and roads via toll barriers, public swimming pools with entrance fees, museums
pros of contracting public goods out to the private sector
- competitive so that the lowest price can be found
- better quality control
- access to broader range of skills and tech
- more flexible and innvoate than gov
- may be less costly
cosn of
