Unit 2.8 · Market Failure: Externalities and Common Pool Resources
Common Pool Resources
AO2
Syllabus Requirement
Resources that are rivalrous but non-excludable, such as fisheries and clean air. Associated with overuse and unsustainable outcomes (tragedy of the commons).
Assessment Objectives
AO2Application and Analysis
Summary
Common pool resources are resources that are rivalrous and non-excludable, leading to significant market failure. This occurs because individuals tend to exploit these resources for personal gain, while the negative effects of depletion are shared by society. Understanding this concept is essential in IB Economics as it highlights the limitations of the market in managing shared resources sustainably.