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Definition: Tragedy of the Commons from Routledge Dictionary of Economics

The overgrazing of common land through each family ignoring the externality of grazing its own sheep. As each family ignores the impact of its own land use, the quality of the land available to other families declines. The problem could be solved by a local government regulation of the number of graziers or by an auction of a fixed number of permits giving access to the land.

See also: common property resources

Summary Article: Tragedy of the Commons
from The A to Z of Corporate Social Responsibility

→ Externalities, Global commons, Public goods

The Tragedy of the Commons was first identified by William Forster Lloyd of Oxford University in 1832, when he observed over-grazing of common pastureland, and the concept has since been adapted to explain apparently selfish behaviour in relation to commonly owned resources and public goods.

When resources are commonly owned, there is no individual incentive to avoid exploitation. The benefits of adding one more animal to a herd accrue to an individual herdsman, while the problem of over-grazing is shared by all. Thus for each individual, there is an incentive to add to their herd beyond the carrying capacity of the land, and individual altruism will do no good as a rival herder will simply step in.

An example is the problem of over-fishing; declining fish stocks affect all fishermen to a small extent, while for each individual there are major benefits in maximising their catch. Equally, polluting common resources such as air or → water saves costs for the individual polluter, while the negative impacts are shared.

A popular market solution to the Tragedy of the Commons is the privatisation of common resources, but this may favour the wealthy and powerful. Alternatives are a responsible approach taken through CSR policies, or market instruments, legal restrictions and taxes imposed by governments.

Ruth Findlay-Brooks
© 2010 John Wiley & Sons Ltd

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