Common good (economics)
Encyclopedia
Common goods are defined in economics
as goods
which are rivalrous and non-excludable. Thus, they constitute one of the four main types of the most common typology of goods based on the criteria:
A classic example of a common good are fish stocks in international waters; no one is excluded from fishing, but as people withdraw fish without limits being imposed the stocks for later fishermen are potentially depleted. To describe situations in which people withdraw resources to secure short-term gains without regard for the long-term consequences, the term tragedy of the commons
was coined. For example, overfishing leads to a reduction of overall fish stocks which eventually results in diminishing yields to be withdrawn periodically.
Common goods which take the form of a renewable resource
, such as fish stocks, grazing land, etc., are sustainable in two cases:
Sometimes, common goods and club goods are subsumed under the broader term of public goods. However, common goods should not be confused with a different type of public goods: social goods, which are defined as goods that could be delivered as private goods, but are delivered instead by the government for various reasons (usually social policy
). This second definition of public goods does not refer to the characteristics of the goods (such as rivalrousness and excludability), but rather to the type of their provision.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
as goods
Good (economics and accounting)
In economics, a good is something that is intended to satisfy some wants or needs of a consumer and thus has economic utility. It is normally used in the plural form—goods—to denote tangible commodities such as products and materials....
which are rivalrous and non-excludable. Thus, they constitute one of the four main types of the most common typology of goods based on the criteria:
- whether the consumption of a good by one person precludes its consumption by another person (rivalrousness)
- whether it is possible to exclude a person from consumption of the goods (excludability)
A classic example of a common good are fish stocks in international waters; no one is excluded from fishing, but as people withdraw fish without limits being imposed the stocks for later fishermen are potentially depleted. To describe situations in which people withdraw resources to secure short-term gains without regard for the long-term consequences, the term tragedy of the commons
Tragedy of the commons
The tragedy of the commons is a dilemma arising from the situation in which multiple individuals, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone's long-term interest for this...
was coined. For example, overfishing leads to a reduction of overall fish stocks which eventually results in diminishing yields to be withdrawn periodically.
Common goods which take the form of a renewable resource
Renewable resource
A renewable resource is a natural resource with the ability of being replaced through biological or other natural processes and replenished with the passage of time...
, such as fish stocks, grazing land, etc., are sustainable in two cases:
- As long as demand for the goods withdrawn from the common good does not exceed a certain level, future yields are not diminished and the common good as such is being preserved.
- If access to the common good is regulated at the community level by restricting exploitation to community members and by imposing limits to the quantity of goods being withdrawn from the common good, the tragedy of the commons may be avoided. Common goods which are sustained thanks to an institutional arrangement of this kind are referred to as common-pool resourcesCommon-pool resourceIn economics, a common-pool resource , also called a common property resource, is a type of good consisting of a natural or human-made resource system , whose size or characteristics makes it costly, but not impossible, to exclude potential beneficiaries from obtaining benefits from its use...
.
Sometimes, common goods and club goods are subsumed under the broader term of public goods. However, common goods should not be confused with a different type of public goods: social goods, which are defined as goods that could be delivered as private goods, but are delivered instead by the government for various reasons (usually social policy
Social policy
Social policy primarily refers to guidelines, principles, legislation and activities that affect the living conditions conducive to human welfare. Thus, social policy is that part of public policy that has to do with social issues...
). This second definition of public goods does not refer to the characteristics of the goods (such as rivalrousness and excludability), but rather to the type of their provision.