One notable form of market failure arises due to a phenomenon first articulated by American ecologist Garrett Hardin, who warned of the Tragedy of the Commons. In his 1968 essay, Hardin explained that when there exist common resources, for which there is no private owner, the incentive among rational users of that resources is to exploit it to the fullest potential in order to maximize their own self gain before the resource is depleted. The tragedy of the commons, therefore, is that common resources will inevitably be depleted due to humans’ self-interested behavior, leaving us with shortages in key resources essential to human survival.
In this video lesson the market failure of common access resources is explained and applied to three such resources being depleted in an unsustainable manner by the world’s people today: fish in the seas, trees from the forests and air in our atmosphere.
After watching this video, you may find the following blog posts particularly useful in learning and understanding what makes common resources a market failure:
- Common access resource cast study – Indonesia’s Reef Fish
- The Tragedy of the Commons as a Market Failure