Two Versions of the Tragedy of the Commons

Herve Moulin and Alison Watts

No 95-04, Working Papers from Duke University, Department of Economics

Abstract: The commons are a one input-one output production process with increasing marginal cost. In the average return game, each agent chooses his input contribution and total output is shared in proportion to individual contributions. In the average cost game, each agent chooses his output share and total input cost is shared in proportion to individual demands. The tragedy is that the non cooperative equilibrium results in inefficient overutilisation of the technology. We prove formally the tragedy when preferences are convex and both goods are normal. This result has not bee proved previously on such a general preference domain. We also show that overutilisation is less severe in the average cost game than in the average return game.

JEL-codes: D62 D70 (search for similar items in EconPapers)
Date: 1995
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Published in ECONOMIC DESIGN, Vol. 2, 1997, pages 399-421

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Journal Article: Two versions of the tragedy of the commons (1996)
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