Tragedy of the Commons
Well-known problem of inefficiency caused by poorly-defined property rights.
(Benjamin, Dwayne. Class Lecture. PPG 1002H Microeconomics for Policy Analysis, University of Toronto School of Public Policy and Governance, 2008.)
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In this type of externality, there is no formal mechanism to exclude consumption of a common good or property, which can result in inefficiency through its overuse. Examples include cows and grazing (common pastures), traffic congestion and over-fishing.
Approved for glossaryposting by Ben Eisen on February 27, 2011 |