Common good (economics)

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For the philosophical term, see common good.
For other uses, see Common Good (disambiguation).
Wild fish are an example of common goods. They are non-excludable, as it is impossible to prevent people from catching fish. They are, however, rivalrous, as the same fish cannot be caught more than once.

Common goods are defined in economics as goods which are rivalrous and non-excludable. Thus, they constitute one of the four main types of the most common typology of goods based on the criteria:

  • whether the consumption of a good by one person precludes its consumption by another person (rivalrousness)
  • whether it is possible to prevent people (consumers) who have not paid for it from having access to it (excludability)

One modern example is climate stability.[1] Another is limited employment in terms of jobs available in an economy, which could farmed out overseas or populated by cheap migrants. More classic examples of common goods are water and air. Water and air can be polluted: water flows can be tapped beyond sustainability, and air is often used in combustion, whether by motor vehicles, smokers, factories, wood fires. In the production process these resources and others are changed into finished products such as food, shoes, toys, furniture, cars, houses and televisions. Another example of a private exploitation treated as a renewable resource and commonly cited have been trees or timber at critical stages (used for wood and paper), oil (used for plastic, paints, foam, fabric, and often burned to create energy), mined metals (used to create machines, tools, nails, cans, coins), and crops (to become cotton and many kinds of foods). Fish stocks in international waters are also cited often. In this later example (avoiding any issues of the natural rights of the fish), while legal excluded from fishing may not apply, when fish are withdrawn from the water without any limits being imposed, living stocks of fish are likely to be depleted for any later fishermen. To describe situations in which economic users withdraw resources to secure short-term gains without regard for the long-term consequences, the term tragedy of the commons was coined. For example, forest exploitation leads to barren lands, and overfishing leads to a reduction of overall fish stocks, both of which eventually result in diminishing yields to be withdrawn periodically.

Debates about sustainability can be both philosophical and scientific.[2][3][4] However, wise use advocates consider common goods which are an exploitable form of a renewable resource, such as fish stocks, grazing land, etc., to be sustainable in the following two cases:

  • As long as demand for the goods withdrawn from the common good does not exceed a certain level, future yields are not diminished and the common good as such is being preserved as a 'sustainble' level.
  • If access to the common good is regulated at the community level by restricting exploitation to community members and by imposing limits to the quantity of goods being withdrawn from the common good, the tragedy of the commons may be avoided. Common goods which are sustained through an institutional arrangement of this kind are referred to as common-pool resources.

Sometimes, common goods and club goods are subsumed under the broader term of public goods. However, common goods should not be confused with a different type of public goods: social goods, which are defined as goods that could be delivered as private goods, but are delivered instead by the government for various reasons (usually social policy). This second definition of public goods does not refer to the characteristics of the goods (such as rivalrousness and excludability), but rather to the type of their provision.

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