graze on common land surrounding the village. Each additional sheep or
cow permitted to graze on that land benefited the owner of that animal,
but also contributed to overgrazing of the land, to the detriment of all the
villagers.
How do we analyze this situation in terms of marginal costs and benefits?
Since there is no practical way to exclude me from adding a sheep to the
common land, there is no practical way to make me pay for my use of the
scarce resource. The result is that there is a zero price. The zero price
leads to the obvious result that in the absence of government
intervention, private users will tend to use the common-property
resources until their marginal benefit reaches zero. At the same time,
however, there will be some positive marginal cost to society of using the
resource. Since the marginal cost will then exceed the marginal benefit
the resource is being overused; society would be better off if less of the
resource was used.
Common-property resources tend to be overused by private firms and consumers.The overuse of common-property resources is especially noticeable in
such cases as the Atlantic cod and Pacific salmon fisheries, where
individual fishers have a natural incentive to overfish. After all, if they
don’t catch a particular fish, they will merely be leaving it to be caught by
the next fisher who comes along. It is this natural inclination to overuse
the fisheries that has led the Canadian government over the years to
develop a system of licences and quotas that restrict access to the