Common resources characteristics, examples, & vs public goods

Common resources characteristics, examples, & vs public goods

What are common resources (common-pool resources)?

Anyone can access to common resources (non-excludable) and it will reduces or restricts the consumption of other people (rivalrous).

Common resources are also called as the common-pool resources and common goods. When one person use common resources, it will reduces or restricts the consumption of other people (rivalrous). But anyone can access to these goods and there is no barrier (no excludable). As examples for the common resources we can say, forests, fish stocks, public parks and so on.

Common-pool resources characteristics

Non-excludable.

The common resources are non-excludable. That means anyone can access to these goods and there is no barrier As examples, people can access to fish stock without any barrier and they can use fish stock without any limitation. In other words, there is a non- excludability. The non-excludability occur as results of the charging zero price for the common goods.

Rivalrous

The common resources are rivalrous in consumption. Rivalrous means there is competition for the consumption of a particular good. In other words, if one person consumes a particular good, another person cannot consume it. There is a marginal cost of using the goods. For one person’s consumption other person has to sacrifice the consumption.

When we take forest as an example for the common resources, if one person cut a tree in the forest and make a table on behalf of him, another person cannot use that tree for his purpose. Because common resources are rivalry in consumption.

Free rider problem

A free rider is a person who is benefited from some economic activity but without incurring any cost. In other words, free riders utilize goods and services with free cost for them. The economic concept of the free rider problem explains that when people get benefits from the goods, services, and resources without paying for them, there will be a market failure. Because when there are too many free riders, there should be too many goods, services and resources to satisfy the consumer requirements. Free rider problem is always associated with the goods that are non-excludable. Common goods such as fish stock are faced with free rider problem. Because Anyone can fishing in the sea at zero cost. So, there may be many fishers and they can fishing too much without any marginal cost.

Tragedy of the commons

Overuse of common resources frequently causes economic issues, such as the tragedy of the commons, in which user self-interest ultimately results in the resource’s decline over time, to everyone’s disadvantage. A tragedy of the commons occurs when a resource is rivalrous and non-excludable in consumption.

The tragedy of the commons is an economic problem in which every individual has an incentive to consume a resource at the expense of every other individual with no way to exclude anyone from consuming.

Let’s consider about the fish stock as an example. Each individual fisherman catches the fishes and sells them to generate a profit. But, there are too many individual fishermen and all of them catch too many fishes totally. So, too many fishes should be provided. If not total fish stock will be depleted and then any of fishermen cannot continue fishing. It is called tragedy of commons. So, government should take actions to protect the common resources

Most common-pool resources are nature gifts.

what are some natural resources that are common resources? Forests, fish stocks

Common resources examples

Forests: Forest is an example of a common pool resource. If one person cut a tree in the forest and make a table on behalf of him, another person cannot use that tree for his purpose. Because common resources are rivalry in consumption.

Historically, especially when the United States was in its infancy, lumber was free for all as long as you had the tools and the strength to harvest it and transport it to where you wanted it to go. Back then it was more of a public forest. Now, unless you are only cutting down firewood for personal use or as a Christmas tree, the United States government no longer allows private citizens to cut down trees, and even then you need a permit.

You may be interested into read more,

USA National Forest Management Act of 1976

Fish stock: People can access to fish stock without any barrier and they can use fish stock without any limitation. In other words, there is a non- excludability. The non-excludability occur as results of the charging zero price for the common goods. Common goods such as fish stock are faced with free rider problem. Because Anyone can fishing in the sea at zero cost. So, there may be many fishers and they can fishing too much without any marginal cost.

Public parks: Public parks are commons that are available for everyone to enjoy. But when a person enter to a public park, he or she will reduces or restricts the consumption of other people.

Water resources: Is water a common pool resource? Yes, rivers, lakes, and aquifers are common resources that are used for drinking, irrigation, and industry. Anyone can use these water resources. However, when a farmer take water for the cultivation, it reduces  the consumption of other people.

common resources examples

Common resources vs public goods

Common resources are not excludable and rival in consumption. Although a person has not paid for the common resource, he or she can consume the common resources (non-excludable). If one person consumes common resources, another person cannot consume them (rivalrous).

Public goods are not excludable and not rival in consumption. Although a person has not paid for public goods, he or she can consume the public goods (non-excludable). Consumption of a public good by a particular person does not limit the consumption of that good by another person (non-rivalrous).

So, main difference between common resources and public goods is, common resources are rivalrous while public goods are non-rivalrous.

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Public goods characteristics, examples, graph, types, and issues

What are the four types of goods in economics?

There are 4 types of economic goods. They are

1. Private goods

2. Club goods

3. Common goods or common resources

4. Public goods.

You may be interested into read more,

What are the four types of goods in economics?

Private goods definition, characteristics, examples

Public vs private goods: What are the differences?

Public goods characteristics, examples, graph, types, and issues

These four types of goods in economics are categorized based on two major characteristics. They are excludability and rivalry in consumption.

Excludability

Excludability means, the ability to remove the people who haven’t paid for the particular good from using it. In other words, if a person has not paid the price of the good or service, he or she cannot consume it. For consumption, a price must be paid. 

Rivalry

The second characteristic is rivalry in consumption. It means there is competition for the consumption of a particular good. In other words, if one person consumes a particular good, another person cannot consume it. There is a marginal cost of using the goods. For one person’s consumption other person has to sacrifice the consumption.

Let’s, consider about four types of goods in economics based on their major characteristics.

Four types of economic goods
Economics-Academic-advisor

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