What describes the tragedy of the commons?

• A. A private market leads to efficient use of shared resources
• B. A social and political problem in which each individual is incentivized to act in a way that will ultimately be harmful to all individuals. An example is overfishing.
• C. Government regulation solves all resource problems
• D. A firm monopolizes a shared resource

Answer: (B)

Shared resources that no one can easily be kept out of create a situation where each person benefits from taking a bit more now, but if many people do that, the resource becomes depleted and everyone loses. The tragedy of the commons describes this dynamic—a social and political dilemma where individual incentives to maximize personal gain lead to collective harm. Overfishing is a classic example: fishermen catch as many fish as possible to maximize today’s payoff, but the fish stock declines, reducing future catches and incomes for all. The root issue is that the resource is rivalrous but hard to exclude, so private markets struggle to prevent overuse. Regulation can help, but it doesn’t automatically solve every problem. A firm monopolizing a shared resource is a different situation tied to control and exclusion, not the widespread overuse problem at the heart of the tragedy.