ECON 130 Exam 2 Readings #3 (Public Goods and Common Resources)

Pandemic Protection as a Public Good (“To Fight Pandemics, Reward Research” – Cowen)

Disease prevention and biomedical research generate widespread benefits that cannot be withheld from non-payers, making them classic public goods prone to underinvestment.

Why Markets Underprovide Pandemic Research (“To Fight Pandemics, Reward Research”)

Innovators cannot charge high prices during emergencies and society needs broad access, so firms lack incentives to invest in advance without public support.

Patent Buyouts for Pandemic Preparedness (“To Fight Pandemics, Reward Research”)

Government promises to buy patents for effective vaccines or drugs at high prices, incentivizing private R&D while enabling cheap widespread distribution in a crisis.

Problem with Relying on Private Patents During Pandemics (“To Fight Pandemics, Reward Research”)

Private patent holders might restrict supply or charge high prices, limiting access and slowing protection during outbreaks.

Why Government Should Pay More Than Market Value (“To Fight Pandemics, Reward Research”)

In a pandemic, other countries may ignore intellectual property rights; paying higher rewards preserves long-run innovation incentives.

Public Goods vs Entitlements (“To Fight Pandemics, Reward Research”)

U.S. spending increasingly goes to private-benefit programs (Medicare, Social Security) rather than national public goods like disease prevention or R&D.

Fireworks as a Public Good (“Bring Back the Boom” – Tahoe City Downtown Association)

Fireworks provide non-excludable enjoyment and do not diminish with additional viewers, making them a local public good requiring donations or public funding.

Free-Rider Problem with Fireworks (“Bring Back the Boom”)

Because people can enjoy the show without paying, voluntary donations often underfund fireworks unless coordinated fundraising or sponsorship is used.

Community Funding for Public Goods (“Bring Back the Boom”)

Tahoe City must raise $77,000 in donations because fireworks cannot be privately sold to individuals; the good must be funded collectively.

Environmental Externalities of Fireworks (“Bring Back the Boom”)

Studies found no significant water quality impacts in Lake Tahoe, affecting regulatory approval and community willingness to support the public good.

Hardin’s “Tragedy of the Commons” (“In the Face of a Looming Climate Crisis” – Ostrom)

Hardin argued shared resources inevitably collapse because individuals have incentives to overuse and no incentive to conserve.

Ostrom’s Challenge to Hardin (“In the Face of a Looming Climate Crisis”)

Empirical research shows many communities successfully manage common-pool resources through cooperation, monitoring, and local governance—not just privatization or regulation.

Ostrom’s Eight Design Principles (“In the Face of a Looming Climate Crisis”)

Successful commons management requires clear boundaries, local rule-making, accountable monitoring, graduated sanctions, conflict resolution, and nested governance.

Self-Governance in Common Resources (“In the Face of a Looming Climate Crisis”)

Communities such as Valencia (Spain) or Maine lobster fishers sustainably manage resources by creating local rules and institutions without top-down control.

Climate Change as a Global Commons Problem (“In the Face of a Looming Climate Crisis”)

The atmosphere is a shared resource that suffers from free-riding; Ostrom emphasizes polycentric, multi-level governance rather than waiting for one global solution.

Paris Agreement and Ostrom’s Ideas (“In the Face of a Looming Climate Crisis”)

Paris relies on voluntary pledges, peer pressure, and local experimentation, mirroring Ostrom’s decentralized approach rather than a single top-down carbon mandate.

Local Climate Action Benefits (“In the Face of a Looming Climate Crisis”)

Cities and states invest in energy efficiency, transportation, and carbon markets because they gain immediate economic benefits while also helping the climate commons.

Inequitable Fishing Quotas (“Decades after commercial fishing limits gutted Native fishing fleets”)

Federal quota systems consolidated access to commercial fisheries, disproportionately harming Native fishing communities that lost traditional fishing rights.

Unintended Consequences of Sustainable Fishing Policies (“Decades after commercial fishing limits gutted Native fishing fleets”)

1970s conservation limits reduced overfishing overall but led to long-term economic collapse in Native villages reliant on small-boat fisheries.

Common-Pool Resource Exclusion Issue (“Decades after commercial fishing limits gutted Native fishing fleets”)

Quota-based systems often exclude smaller or traditional users, turning a shared resource into a system dominated by large permit holders.

Loss of Local Economies from Quota Allocation (“Decades after commercial fishing limits gutted Native fishing fleets”)

As quotas were bought up by large operators, rural communities lost income, jobs, and cultural heritage tied to fishing.

Advocacy for Policy Reform (“Decades after commercial fishing limits gutted Native fishing fleets”)

Native groups now call for reallocation, community quotas, or co-management to restore sustainable access and correct inequities from past policy.

Space Debris as a Tragedy of the Commons (“Space trash is a big problem. These economists have a solution.” – Plumer)

Space orbits are open-access and rivalrous; countries overuse them by launching satellites without internalizing cleanup costs.

Kessler Syndrome (“Space trash is a big problem”)

A runaway cascade of collisions could make low-Earth orbit unusable, illustrating the long-term danger of unmanaged common resources.

Underinvestment in Space Cleanup (“Space trash is a big problem”)

Every country benefits from cleanup, but none wants to pay because gains are global while costs are local—classic free-rider problem.

Pigouvian Launch Fee for Orbit Use (“Space trash is a big problem”)

Economists propose a launch tax or user fee to align incentives, reduce overuse, and fund debris removal, similar to other environmental externality solutions.

Challenges of International Coordination (“Space trash is a big problem”)

Nations disagree over who should pay (U.S., Russia, China launched most debris), making global commons management politically complex.

Voluntary Debris Guidelines Insufficient (“Space trash is a big problem”)

Current voluntary rules fail because incentives to launch remain strong while incentives to remove debris are weak.

Legal Barriers to Cleanup (“Space trash is a big problem”)

Under current law, debris from another country cannot be removed without permission, complicating management of the commons.