Common-pool Resource

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A good that functions as a hybrid between a public and private good because it is shared and available to everyone but also scarce, with a finite supply. These open-access resources are susceptible to overexploitation and diminished availability if each individual pursues their own self-interest. Common-pool resources share essential characteristics with both public and private goods. Like public goods, common-pool resources are non-excludable. However, unlike public goods, common-pool resources are rivalrous in consumption, similar to private goods, or the normal goods that we buy and sell on markets.

All three types of economic goods are also scarce; the amount available at any given point in time is limited, so people economize over how they use and consume them. Being rivalrous in consumption means that when someone consumes a unit of the good, then that unit is no longer available for others to consume; all consumers are rivals competing for the good, and each person’s consumption subtracts from the total stock of the good available. Note that in order for a common-pool resource to be economically relevant it must also be scarce since a non-scarce good cannot be rivalrous in consumption and, by definition, anything that is not scarce is not an economic good anyway.

A good that is non-excludable means that no one is able to prevent others from consuming the good. The combination of these two properties (non-excludability in supply and rivalry in consumption) means that common-pool resources are susceptible to overuse and congestion. Because individual and group interests are in conflict, they create incentives for users to ignore the social costs of their extraction decisions, as the group has to bear the cost of managing, protecting, and nurturing the resource. This is why they are prone to the tragedy of the commons when every individual tries to reap the greatest benefit from a given resource.

See: Tragedy of the Commons.


Common-Pool Resource (Investopedia)