Tragedy of the commons

Definition

The tragedy of the commons refers to a situation where individuals, acting independently in their own self-interest, deplete or destroy a shared resource that is limited in supply. This occurs because each individual has an incentive to maximize their own benefit without considering the long-term consequences for everyone.

Related terms

Externalities: Externalities are costs or benefits that are imposed on third parties who are not directly involved in a transaction or activity.

Common-pool resources: Common-pool resources are natural resources that are collectively owned or used by a group of people.

Free rider problem: The free rider problem refers to when individuals benefit from a public good without contributing to its production or maintenance.