What is the Problem with Commons
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Example:
This concept can be understood well by the way of examples. Let us take the table that is shown here.
Production on the Commons
Number of Cows Output of Milk (Gallons)
100 1000
200 2000
300 2600
399 2799
400 2800
401 2800
500 2700
600 2600
Let us suppose that the table is showing the relationship between the number of cows that are using a large meadow and also the amount of milk that they are producing. In case there is just one person who controls the land, it would be a very foolish thing to do if there are more than 400 cows that are grazing in the meadows.
But if this thing would be open to all the headers, then there would be 500 cows and each one of them would be doing things that would be beneficial to him. If there are 100 of these herders, and each one of them has four cows on average, and each cow is capable of producing seven gallons of milk.
In case there is one extra cow that is being included with one header, then the total production in the milk would not change, but the quantity for the herd would certainly increase. Instead of four, he would have five cows that are producing 6.98 gallons each. If the fifth cow is adding 6.98 gallons, the total produce he has got is more.
But it has to be noted that even before the cow was added, there were 0.02 gallons less that was being produced. This way the net gain that the herder would get would be 6.9 and not 6.98. The herder, in this case, would not be bothered about the reduction in the 0.02 gallons of milk that is from each of the other 396 cows that he does not earn.
This is because each one of the herders is having the same set of incentives in this case. There is one sequence that is happening without any intention. It is of the by-product type too. Each of the headers is not bothered about the impact that his cows would possibly have on the other cows that he does not own.
This is called the problem of the commons. It has to be noted that there are commons where there are resources available. It could be anything like a hunting area, grazing land, fishing grounds and so on that is open to everybody. The logic behind all this is that there are problems of depletion of resources that are happening due to these commons.