Assignment 1: Identify Market Failure (550 words min)
Introduction to Tragedy of the Commons
In economics, the “tragedy of the commons” is the depletion of a shared resource by individuals, acting independently and rationally according to each one’s self-interest, despite their understanding that depleting the common resource is contrary to their long-term best interests. In this course, we use the term as it relates to environmental issues and sustainability. The commons dilemma stands as a model for a great variety of resource problems in society today, such as water, land, fish, and non-renewable energy sources such as oil and coal.
Situations exemplifying the “tragedy of the commons” include the unrestricted pollution of rivers and streams, uncontrolled industrial air emissions, overfishing and destruction of the Grand Banks, and the destruction of salmon runs on in the Pacific Northwest due to damming.
Readings:
- Porter: “Creating Shared Value”, Case No. R1101C.
- Is monetizing ecosystem services essential for sustainability? (A Primer on Sustainability, Chapter 3)
Presentation:
Podcast:
Week 2 Assignment 1: Identify Market Failure
- In a 1-to-2-paragraph response, describe and identify a market failure in the following areas: energy, food, health care, or the environment and explain why the failure occurred.
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