Common Resource

A common resource is a rivalrous but non-excludable good — one user's consumption reduces the amount available to others (rivalrous), but no user can be prevented from accessing it (non-excludable). Fisheries, atmospheric capacity, groundwater basins, and shared grazing land are standard examples. Without coordination each user ignores the externality their consumption imposes on the others, leading to over-extraction relative to the social optimum — the tragedy of the commons.

When to use

The Topic 2 / EX-8 fishery is the textbook formalisation: country $i$'s cost is $TC_i = (q_i + B q_j)^2$, so the rival's catch raises your own cost via the parameter $B$. The strategic structure is then identical to Cournot Competition (or Stackelberg Model when one country commits first), but the welfare interpretation is sharper — the Pricing Externality is the entire reason individual maximising behaviour falls short of the cooperative optimum. Solutions in the public-economics literature: privatisation, quotas, taxes on extraction (Pigouvian), or self-organised governance (Ostrom).