Question

What are the economic similarities between the problem of the destruction of the tropical rain forest, the near extinction of bison, and the problem of overfishing?

Answer 1

All these problems suffer from the economic concept of " tragedy of commons " . This is a situation where a common resource is exploited by individual users who act independently according to their own self-interest, and hence behave in a manner contrary to the common good of all users by depleting or spoiling the shared resource through their collective action. In such scenarios, property rights are not well-defined and the public cost of the good is higher than individual costs which leads to over-utilization of the resource.

This can be well illustrated in the case of overfishing, hunting bisons (leading to their near extinction) and destroying the tropical rainforests. While, it is a shared responsibility to protect these resources, no one individual bears all the cost of using these resources hence giving the name "tragedy of commons".