Tragedy of commons denotes a situation where many individuals share natural resources (commons). Shared implies that every person has no claim to any portion of the resource, instead, to the use or consumption of a part of the resource for personal gain. Tragedy denotes person tendency to exploit or abuse the commons to their advantage, without limit in the absence of regulation, in such a state of interaction, the commons are exhausted and ruined (Ostrom 4). Because of this relationship, consequences results or emerges, which are experienced or born by unrelated 3rd parties, and such consequences are called externalities. Externalities may be positive or negative in nature. For example, pollution, produced by productive enterprise and affecting others without choice and were perhaps not considered is a negative externality. Pollination of crops in the surroundings of bees kept for harvesting honey or whenever someone paints his/her building and promote neighborhood views as well as the worth of their properties are examples of positive externalities (Lasserre et al. 3).
Externalities receive political, social, and economic responses. For example, the political response to externalities may include government or state intervention in the market by implementing regulations on minimum ages for purchasing alcohol or cigarettes. Economic responses to externalities may include policies towards environments. For example, economic response to externalities may entail intervention within the price mechanism via environmental subsidies and taxes. Moreover, control and command measures through directives and regulations. Social responses to externalities always occur during market failures resulting from consumer ignorance. For example, lack of information regarding benefits and costs of products available within the market place. State action may be improving information to assist consumers as well as producers value the true benefit or cost of a service or good. An example of filling information gap may be compulsory labeling cigarette packages or packets with health warnings or information to reduce smoking.
Works Cited
Lasserre, Pierre, and Antoine Soubeyran. A Ricardian Model of the Tragedy of the Commons. Milano: Fondazione ENI Enrico Mattei, 2011. Print.
Ostrom, Elinor. The Drama of the Commons. Washington, DC: National Academy Press, 2012. Print.
