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Abstract:
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"This paper shows how Elinor Ostrom’s public choice roots and transaction economics inform her ideas of Governing the Commons. We define Ostrom’s thinking as being based in three inter-related collective action problems of knowledge, boundaries, and consent, and examine early public choice and new institutionalist thought on her approach. The historic starting point of thinking about CPR is Pigou’s concept of pollution externality. His solution is a tax, which, ignoring the exclusionary trait, curbs the rival characteristics of pollution though regulation and essentially transforms the CPR, clean air, into a public good. Later, Coase revisited the topic of externality and came to the opposite conclusion by addressing the aspect of exclusion rather than rivalry. Independently, there also was a discourse on the theory of public expenditure, starting with Samuelsson’s claim that public goods could optimally only be provided by the state. Tiebout, however, contradicts Samuelson showing that there exists a market-type solution for the provision of 'local' public goods. This argument is followed by Buchanan’s theory of clubs. Hardin, then, introduces the concept of the CPR and says that the 'tragedy of the commons' can be solved by either enclosure of the commons (in the Coase tradition of private property rights), or, alternatively, by state regulation (in the Samuelsson and Pigou tradition of public goods provision and regulation of externalities). Ostrom, however, being influenced by both Tiebout and Buchanan, saw a third way of solving the CPR problem. Her proposed solution was to redefine the CPR to what is essentially a local public or club good by partially addressing the characteristics of exclusion and rivalry simultaneously. Exclusion is addressed group enclosure rather than the creation of private property, and rival consumption is addressed by the governance institutions rather than state regulation."
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