The Tragicomedy of the Commons: Why Communities Rationally Choose 'Inefficient' Allocations of Shared Resources

Abstract

"Open access to a shared resource, or 'commons,' leads to usage beyond the efficient level. There are essentially two ways for a community to manage a commons to avoid overusage: • Charge an entry fee that is sufficiently high to restrict usage to the efficient level • Distribute an efficient number of entry rights entitling owners to use the commons. Either of these methods increases wealth. How will this wealth be distributed? If the first method is used, the community must decide how to distribute the revenue from the entry fee. If the second method is used, the community must decide how to distribute the entry rights."