A common property resource is a consumption good or factor of production whose ownership has not yet been decided. Ownership is established simply by taking the good. Individuals quite rationally believe that if they do not quickly appropriate the good themselves, someone else will and their own chance will be gone. (Rarely does anyone who finds a $10 bill lying on the street leave it where it is, on the grounds that he can always come back for it when he needs it.) This belief, if acted upon by everyone in a society, leads to an undesirable erosion of the resource. One example of this erosion is the exhaustion of fisheries that cannot be brought under the control of a single nation. The Grand Banks off Canada's east coast is one such case; the west coast salmon fishery is another. A similar erosion results from the poaching of elephants (for their tusks) and rhinoceroses (for their horns), which proceeds at such a pace that these species might not survive. Extinction is more than a theoretical possibility – as any dodo can tell you.

THE STATIC COMMON PROPERTY PROBLEM

For concreteness, consider the case of a fishery. The annual catch from the fishery, y, depends upon both the stock of fish, s, and the number of active fishing boats, b. (Non-integer values of b imply that at least one boat fishes for only part of the season.)