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Common Resources

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Common Resources

Do you think about all the resources you use every day? The computer programs you use, the Wi-Fi signal you tap into, the fabric of your clothes, the air you breathe, and the sewage service are all types of resources at our disposal. They are all resources made available to us, but they are all different types of resources. Most of the time we go through life without even thinking about the resources we are consuming because our use of them is either subtle or matter of fact second nature. The four types of resources are: private goods, artificially scarce goods, public goods, and common resources. In this article you will find out whether there are any common resources that you use, and how your usage affects the amount of those resources available to others. Ready to dive in? Keep scrolling!

Meaning of Common Resources

The meaning of common resources is that they are resources that are accessible to everyone, but cannot be consumed by everyone at the same time. You cannot prevent others from using a resource and as they use it, less of it becomes available to you.

Common resources are nonexcludable goods, which means that no one can be prevented from using them. Many natural resources are considered nonexcludable goods because there is no way of preventing others from using goods such as air or water from a river. An excludable good would be a good that others can be prevented from using such as airplanes, restaurants, or anything that requires payment or exchange to use.

Common resources are also considered rival in consumption, meaning if they are used by one party, another party cannot use them. Food, clothing, and even a chair can all only be used by one person at a time. A good that is nonrival in consumption is the sewage system installed in the community. Everyone can use it and multiple people can use it at the same time.

Common resources are resources that are accessible to everyone but cannot be used by everyone at the same time. They are nonexcludable goods that are rival in consumption.

Common resources can be thought of in terms of units. Everyone being able to access a unit is what makes it nonexcludable. No one else being able to use the unit at the same time makes it rival in consumption. No two people can drink the same molecule of water or breathe in the same air molecules.

Common Resources Examples

Common resources examples are: public land in the United States, public forests, and fishing. These are all resources that are not exclusively owned by any one person. Public land is owned by the government, so no one can just come and lay claim to it. There is not one person or group of people that can prevent others from accessing it unless the government as a whole decides to sell the land or make it illegal for public use. Forests and lakes are much the same, where they are not owned by any one person. Of course, people can own pastures, forests, and lakes and can use the land as they wish for the most part, but then it would be a private good.

Learn more in our article - Public and Private Goods.

Public land is a natural resource that everyone in the United States can use. They can use it for hunting, as a pasture to graze their livestock, or to go hiking and camping. Public land is considered a common resource because it is nonexcludable since everyone is allowed to go onto it without being considered trespassers.

However, if one rancher is grazing their cattle on a 10 acre portion of it, then these 10 acres cannot be used by another rancher to also graze their herd or a hunter to hunt any game. This makes it rival in consumption.

Any deer, elk, birds, etc. that are harvested by one hunter or trapper can no longer be consumed by another. This forces the other hunters to either hunt another animal or to wait until the next season naturally replenishes the stock.

Common Resources.Cattle grazing.StudySmarterCattle grazing on public land. Source: Wikimedia Commons

Forests are an interesting common resource since most countries have placed some sort of regulation on who can log the trees. Historically, especially when the United States was in its infancy, lumber was free for all as long as you had the tools and the strength to harvest it and transport it to where you wanted it to go. Back then it was more of a public forest. Now, unless you are only cutting down firewood for personal use or as a Christmas tree, the United States government no longer allows private citizens to cut down trees, and even then you need a permit.

Public forests are an example of common resources because the trees in the forest do not belong to one single person. When you cut it down and build a house with it or chop it for firewood, no one else can build their house with it or burn it in their fireplace.

The fishing industry is both domestic and international. Here, unlike public lands and forests, the resource can cross borders and go wherever it pleases. This means that countries have to coordinate their policies to regulate the industry to prevent conflict.

Fishing is an example of a common resource because the stock of fish in the ocean is a part of natural biodiversity and does not belong to any single person. The fish can be caught by whoever goes out fishing to catch it, not limited to any one person, making it a nonexcludable resource. The fish are rival in consumption resources because once the fish is caught, it reduces the amount of fish available to everybody else.

Common Resources.Fishing Vessels.StudySmarterFishing vessels. Source: Wikimedia Commons

Characteristics of Common Resources

Characteristics of common resources are that they are nonexcludable and rival in consumption. Common resources are often, but not limited to, natural resources, like having a variety of animals and plants (biodiversity), clean air, and water. These two characteristics can pose issues for the resource itself because many people want to use them but they cannot all use them at the same time. As a result, they are often faced with overuse and become subject to regulation so that they are preserved.

Excludability

Goods can typically be classified as excludable or nonexcludable. If a good is excludable it means that some people can be prevented from using this good. Whoever supplies the good can prevent people who do not pay for the good from accessing it or using it. Common resources are nonexcludable resources. This means that anyone can use them, so no one can be excluded from using them. This is important because for some resources it is nearly impossible to regulate their use and some people might not be able to afford to partake. If all roads were to become an excludable resource then those who could not afford to pay to use them would suffer, especially if there is no alternative.

Rival in consumption

Common resources are considered rival in consumption because only one unit can be used by one person at a time. A resource is nonrival in consumption when it can be used by multiple people at the same time such as the internet or the public sanitation system. Common resources cannot be used by multiple people at once, which makes them scarce the more people use them. A road is rival in consumption because there no one can be in the same spot as you on the road without causing an accident. The more cars are on the road the scarcer the resource becomes because not every car and bicycle fits on the road at the same time.

Types of resources

Table 1 below will help you gauge where the common resources sit compared to other types of resources based on their characteristics.


Types of ResourcesRival in ConsumptionNonrival in Consumption
Excludable ResourcesPrivate Goods
  • Clothing
  • Airplane Rides
Artificially Scarce Goods
  • Subscription-based Entertainment
  • Computer Software
Nonexcludable ResourcesCommon Resources
  • Wild Game
  • Water in a River
Public Goods
  • Public Sanitation
  • Law Enforcement

Table 1. Types of Resources - StudySmarter

To learn more about public goods, read our explanation - Public Goods

Types of Common Resources

Common resources can be split into at least two different types. Some are man-made and some are natural. A man-made common resource would be irrigation systems, wells, artificial ponds, roads, parking spaces, and boat ramps. Natural common resources are things like rivers, pastures, forests, wild game, and fishing. Man-made resources are usually created and maintained by the government which means they can be produced over time and are not as finite as naturally occurring resources. Roads and parking spaces can be built within a couple of years and has tax revenue already set aside for it. The naturally occurring resources like the forests take much longer to replenish even with the replanting of trees after the land has been logged. Even with restorative measures, the natural environment will take many decades to regenerate.

Tragedy of the Commons

The tragedy of the commons refers to the phenomenon where common resources are depleted because everyone who had access to the resource used it in their own self-interest, resulting in it being overused and depleted for everyone else.

When a pasture is available for shepherds to graze their flocks of sheep, they all want their own sheep to have the best grass so that they can grow the best wool to earn the maximal payout. Every shepherd will find the best patch of grass and have their sheep graze as much as they can. Then they will move on to the next best patch and so on. If all the shepherds with access to these pastures do this, there is a steady increase in use until the pastures can no longer replenish themselves in a current season. Now, there is little grass left and no one else can graze their sheep anymore because there is nothing left. The common resource had been overused.

The tragedy of the commons refers to the phenomenon where common resources are depleted because everyone who had access to the resource used it in their own self-interest, resulting in it being overused.

Overuse occurs when a common resource is depleted because consumers ignore the fact that their use is diminishing the resource that remains for others.

common resources Supply of a common resource in an unregulated market studysmarterFigure 1. Supply of a common resource in an unregulated market, StudySmarter Originals

In Figure 1 the supply curve (S) is a total of all producers' supply curves that are using the common resource, and it shows their marginal private cost. At this level of supply, the equilibrium price and quantity of the market are at EMKT. This level of supply and market price do not take into account the cost that this level of production has on the common resource. It does not take into account the overuse that is depleting the resource and the negative externalities associated with it.

Dive deeper into the topic of externalities in our article - Externalities

The marginal social cost curve (MSC) shows where the supply of a good would be if producers took the depletion of the common resource caused by their production into account. This social cost has a similar effect as a negative externality. The optimal level of supply and demand where the common resource is not overused is at the optimal point (O). This shows us where the optimal quantity level (QOPT) and price (POPT) would be. The MSC curve is to the left of the supply curve because the optimal quantity is less than the actual quantity of resource used due to its over-consumption.

Solutions to overuse of a common resource

Common resources are often subject to regulation to prevent them from being overrun and depleted. In the case of overfishing, governments set quotas and seasonal limits on fishermen to ensure that they do not overfish an area or a population. In the logging industry, you must hold specific permits to be allowed to log the land and then only certain tracts and species of trees. National and state parks are big tourist attractions that can cause wear and tear on these areas and cause them to be overrun. To mitigate this regulators put in place entrance fees and maximum capacity laws which serve to protect the parks and generate revenue for their maintenance. Another common approach is to privatize the common resource. If a resource is privatized it stands under the protection of whoever owns it and it is up to them to make sure the resource remains viable.

Common Resources - Key Takeaways

  • Common resources are resources that are accessible to everyone but cannot be used by everyone at the same time.
  • Common resources are nonexcludable goods, which means that no one can be prevented from using them. They are also considered rival in consumption, meaning if it is used by one party, another cannot use them.
  • Common resources can be either man-made such as roads, and irrigation systems, or natural such as rivers, public land, and forests.
  • The tragedy of the commons is when common resources are depleted because everyone who had access to the resource used it in their own self-interest, resulting in it being overused, and depleted for everyone else.
  • Solutions to the problem of overuse of common resources are: quotas, seasonal limits, permits, and privatization.

Frequently Asked Questions about Common Resources

Common resources are goods that are accessible to everyone but cannot be used by everyone at the same time. They are a nonexcludable good that is rival in consumption. 

The characteristics of common resources are that they are nonexcludable and that they are rival in consumption.

Examples of common resources are: public lands, public forests, clean air, and water.

Types of common resources are man-made ones like roads, parking spaces, and irrigation systems. Another type is natural ones like rivers, forests, and pastures.

The tragedy of the commons is when common resources are depleted because everyone who had access to the resource used it in their own self-interest, resulting in it being overused.

Final Common Resources Quiz

Question

What are common resources?

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Answer

Common resources are goods that are accessible to everyone but cannot be used by everyone at the same time. 

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What are the characteristics of common resources? 

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Answer

The characteristics of common resources are that they are nonexcludable and that they are rival in consumption. 

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What is an example of a common resource?

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Clean water and air, public roads, and public land.

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What is the tragedy of the commons?


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The tragedy of the commons is when common resources are depleted because everyone who had access to the resource used it in their own self-interest, resulting in it being overused. 

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What does it mean when something is a nonexcludable good?

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A nonexcludable good is a good where you cannot prevent someone else from using it. 

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When is a resource nonrival in consumption?

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A resource is nonrival in consumption when the good can be used by multiple people at the same time.

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Is a national park a common resource? Why or Why not?

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Yes, because anyone can go to a national park, but not everyone can go at the same time, it would become overcrowded. 

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What is overuse?

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Overuse occurs when a common resource is depleted because consumers ignore the fact that their use is diminishing the resource that remains for others.  

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What does the marginal social cost curve (MSC) show?

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The MSC shows where the supply of a good would be if producers took the depletion of the common resource caused by their production into account 

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What is a solution to the overuse of common resources?

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Some solutions are quotas, permits, privatization, and entrance fees.

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Is law enforcement a common resource? Why or why not?

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No, because it is nonrival in consumption meaning, it can be used by multiple people at once.

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Question

If a cattle rancher grazes their herd on the same public pastures for 5 years and does not rotate pastures because they do not want to give up their spot, what will happen to this common resource?

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It will be overused and will be depleted for everyone. 

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Why are public roads a common resource?

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They are because everyone is allowed to use the road but the more cars are on the road the scarcer the resource becomes because not every car fits on the road.

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How can excludability remedy the tragedy of the commons?

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It can limit the number of people using a resource. 

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Why will the optimal quantity used of a resource be less than the equilibrium quantity? 

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It will be less because the equilibrium quantity does not take into account the social costs of production. 

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What is the difference between a common resource and a public good?

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A common resource is rival in consumption where a public good is not.

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You ________ prevent others from using a common resource and as they use it, _____ of it becomes available to you.


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cannot, less

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Many natural resources are considered ______________ goods because there is no way of preventing others from using goods such as air or water from a river.


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nonexcludable

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A sewage system is a common resource because...

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It is not a common resource.

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Why is public land a common resource?

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Because it is nonexcludable yet rival in consumption because there is a limit to its capacity.

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What might happen if common goods became excludable?

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Those who could not afford to pay would suffer.

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What kind of good is a magazine subscription?

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An artificially scarce good.

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What is a risk with common goods?

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Overuse.

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A boat ramp is a ___________ common good.

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man-made

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When a stock of fish is harvested to the point where the population cannot recover, this phenomenon is called ____________.

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The Tragedy of the Commons

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When is a resource artificially scarce?

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When it is nonrival in consumption, yet excludable.

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What type of good is computer software?

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It is an artificially scarce good.

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A negative externality is similar to the _________________.

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marginal social cost.

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What is the marginal social cost?

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It is the cost of overuse of common resources.

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Common resources are often subject to _____________ to prevent them from being overrun and depleted.


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government regulation

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What is a common approach to protecting common resources like state parks?

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To privatize them by charging entrance fees, and limiting capacity.

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What are the ways common resources are protected?

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Solutions to the problem of overuse of common resources are quotas, seasonal limits, permits, and privatization.

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If a resource is privatized it stands under the protection of whoever owns it and it is up to them to make sure the resource remains viable.

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True.

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