| Summary: | We analyze the problem of the commons from a game-theoretic perspective. After defining the features that define common-pool resources, we build a formal model that shows that because of their very nature, there are incentives to both over-utilize them and under-invest in their care. We examine two possible arrangements to eliminate the existence of these perverse incentives. The first one, privatization, exhibits efficiency properties supported by traditional microeconomics. The second one is management by a limited group of local users for an unlimited period of time. We prove that, under certain conditions, this second arrangement can provide the right incentives for the successful management of the commons.
|
|---|
