Rethinking the commons problem: Technical change, knowledge spillovers, and social learning

New Journal of Environmental Economics and Management paper available with co-author and MERE affiliate Dale Squires!

Download free until Sept 11th here


The commons problem is even more severe than standard economic analysis suggests due to accumulated and new technology accompanied by spillovers of nonrival knowledge, creating a second market failure. The resulting endogenous dynamic increasing returns to scale external to producers that create endogenous growth of production lead to ongoing and accelerating rates of natural capital depletion. Optimum and open-access steady-state equilibriums indicated by canonical models may not exist, and corresponding resource stocks vary considerably from conventional wisdom. Market-based solutions alone for the commons problem are insufficient to achieve optimal economic welfare, and require a complementary technology policy for the second market failure and dynamic increasing returns to scale arising from nonrival ideas and knowledge spillovers and social learning. An empirical example illustrates the impact of technological change and accompanying knowledge spillovers and social learning.


Image credit:

Fishing gear in the Southeast Pacific Ocean from left to right: a Chilean purse seiner; a tuna purse seiner in tropical waters of the northern part of Area 87; a Peruvian purse seiner; a trawler; and a small purse seiner.

Image ID: fish2200, NOAA’s Fisheries Collection
Photographer: Illustration by M. Recabal