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Table of Contents

  1. Topic pack - Microeconomics - introduction
  2. 1.1 Competitive Markets: Demand and Supply
  3. 1.1 Competitive Markets: Demand and Supply - notes
  4. 1.1 Competitive markets - questions
  5. 1.1 Competitive markets - simulations and activities
  6. 1.2 Elasticities
  7. 1.2 Elasticities - notes
  8. Section 1.2 Elasticities - questions
  9. Section 1.2 Elasticities - simulations and activities
  10. 1.3 Government intervention
  11. 1.3 Government Intervention - notes
  12. 1.3 Government intervention - questions
  13. 1.3 Government intervention - simulations and activities
  14. 1.4 Market failure
  15. 1.4 Market failure - notes
    1. The meaning of externalities
    2. Types of externalities
    3. How do externalities affect allocative efficiency?
    4. Negative externalities of production
    5. Negative externalities of consumption
    6. The economic theory of traffic congestion
    7. Demerit goods
    8. Government responses - demerit goods
    9. Possible government responses to externalities
    10. Direct government provision
    11. Extension of property rights
    12. Taxes and subsidies
    13. Tradeable pollution rights
    14. Regulation, legislation and direct controls
    15. Positive externalities of production
    16. Positive externalities of consumption
    17. Merit goods
    18. Why might merit goods be underprovided by the market?
    19. Government responses - merit goods
    20. Public goods
    21. Common access resources & sustainability
    22. The tragedy of the Commons
    23. Common access resources in practice
    24. Sustainability
    25. Threats to Sustainability
    26. The threat to sustainability from the use of fossil fuels
    27. The threat to sustainability from poverty
    28. Government responses to threats to sustainability
    29. Cap and Trade Schemes
    30. Promoting Clean Technologies
    31. The 'dirty side' of cleaner technologies
    32. International responses to threats to sustainability
    33. Asymmetric information
    34. Abuse of monopoly power
    35. Inequality
  16. Section 1.4 Market failure - questions
  17. Section 1.4 Market failure - simulations and activities
  18. 1.5 Theory of the firm
  19. 1.5 Theory of the firm - notes (HL only)
  20. Section 1.5 Theory of the firm - questions
  21. Section 1.5 Theory of the firm - simulations and activities
  22. Print View

Common access resources & sustainability

Syllabus: Explain, using examples, common access resources.

Definition: Common access resources are natural resources including forests and pastures, fisheries, oil and gas fields, national parks, grazing lands and irrigation systems, which are characterised by the difficulty of excluding people from using them.

Syllabus: Apply the concept of sustainability to the problem of common access resources.
As a result of the inability to exclude people from using them and therefore to charge a price for their use, over-consumption, degradation and depletion of these resources occur. Indeed, the use by one individual or group of the resource will mean that less of that resource is available for use by others. This distinguishes common access resources from
pure public goods, which exhibit both non-excludability and non-rivalry in consumption.

Syllabus: Examine the consequences of the lack of a pricing mechanism for common access resources in terms of goods being overused/ depleted/degraded as a result of activities of producers and consumers who do not pay for the resources that they use, and that this poses a threat to sustainability.

The consequence of the actions of producers and consumers, who do not pay for the resources they use, creates a threat to sustainability and, therefore, the availability of common access resources for future generations (babies yet to come).

Syllabus: Discuss, using negative externalities diagrams, the view that economic activity requiring the use of fossil fuels to satisfy demand poses a threat to sustainability.

In the diagram on the left, which should be very familiar to you, the vertical difference between the Private Cost (MPC) curve and the Social (MSC) curve is the externalš costs.

This time the external costs are borne by future generations as current production and/or consumption depletes the amount available now while the resource is not able to be renewed until well into the future.

The origin of the study of common access resources dates back to medieval land tenure in Europe, where herders were entitled to graze their cows on common parcels of land for free. The result was over-grazing and the degradation of the land. The problem was described and analysed by Garrett Hardin in his article 'The Tragedy of the Commons', which appeared in the Science journal in 1968. Hardin explained that it was in each herder's interest to put any additional cows he acquired onto the grazing land, even if the quality of the common was damaged for the whole community. This was considered to be a rational economic decision by the individual herder, because each additional cow added to the individual's 'marginal utility', while the damage to the common land was shared by the entire group. However, the consequence of these individual rational economic decisions was market failure because these actions resulted in the degradation, depletion or even destruction of the resource to the detriment of all users and, therefore, society in general.

Think of the Onceler in The Lorax (Singing) - If I didn┤t do it then someone else would! Now that┤s a very good point...Mr Onceler

Syllabus: Discuss the view that the existence of poverty in economically less developed countries creates negative externalities through overexploitation of land for agriculture, and that this poses a threat to sustainability.

Syllabus: Evaluate, using diagrams, possible government responses to threats to sustainability, including:
  • legislation,
  • carbon taxes,
  • cap and trade schemes, and
  • funding for clean technologies.
Syllabus: Explain, using examples, that government responses to threats to sustainability are limited by the global nature of the problems and the lack of ownership of common access resources, and that effective responses require international cooperation.