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Commons vs Anti-Commons: A Business Model

Published August 26, 2004 in BUSINESS THEORY
By Ryan Parsons | Michelmann and Heller, Buchanan and Yoon
However non-interesting this may be for the normal person, any business major or those who work in a field that requires some business theory knows or, at least, has heard of the idea of COMMONS and ANTI-COMMONS. The following report discusses the two terms and uses reference to the study conducted by Buchanan and Yoon in an attempt to better understand each ones meaning.

Commons and anti-commons are two concepts that have been approached and analyzed through studies by people such as Michelmann and Heller. Commons and anti-commons occur when there is a shared valuable resource between a number of users with no rules on use and, therefore, a lack of conformity by all parties. Commons occur when the resource comes into overuse and anti-commons occur when the resource has under use (2). Even though the two terms seem to be at polar opposites, there exists a duality between them as both occur due to either a lack of conformity or exclusion rights.

Buchanan and Yoon give many examples of commons such as: fishing grounds, oil pools, hunting territories, and medieval farmland (1). All of these resources are 'depletable,' and since there is access to this resource by multiple individuals, over-utilization is bound to occur without a parent set of guidelines on terms of use. The ending result of a common is bound to be destruction since the individuals taking part in the uncontrolled resource will grow too large and deplete the resource entirely. However, commons have other consequences as well.

Since the increased use of the resource lowers the benefit for the owners, all will try to increase to keep their benefit to a maximum. This conversely results in marginal negative productivity even with the increase use of the resource (2). Another problem from the uncontrolled use of the resource is the fact that it is or may be renewable. With the overuse of the resource it will lose its ability to re-generate in an effective manner or be wiped out completely. This fact has very strong implications for the future of the resource. It is obvious that commons can be very problematic and many people have attempted to give solutions to the common problem.

The first solution is to limit the usage by all users of the resource. This will increase efficiency and avoid the overuse of the resource. The users can also assign ownership rights. The result of these applied rights will effectively restrict usage to a level that will maximize the value potential of the resource. However, this also has its consequences known as the anti-commons.

The anti-commons problem occurs from under use of the resource due to strict usage or ownership rights. This is because there are multiple owners who have something to gain by restricting all other users. Since it now requires the decision of the many, no one person can attempt to use an optimal amount of the resource. This follows close to the problem of commons but is actually opposite on the final result (1).

In commons, the more individuals that are involved will reduce the productivity along with the rents of all users. This will also result in a waste of the resource, as it is not being used effectively. In the case of anti-commons, the more owners result in less use of the resource and, therefore, less rents. This, like the commons, will also result in a waste in the resource from under use (1). In conclusion, the waste in idleness caused by ownership is similar to the waste caused from over use due to no restriction.

A storybook example offered by Buchanan is about two parking lots. One lot represents a common and is allowed use by multiple users. The other lot has two owners who each must give a specific color parking permit to allow an additional user to park in their lot. Therefore, both owners must agree to the same user or that user cannot park. This lot now represents an anti-common since it will have a sub-efficient amount of users since receiving both parking permits will be hard to come by. The efficiency of this lot will continue to drop as more owners join on since a user will then need a parking permit from each owner meaning all owners must agree to that individual using their lot. A feat that will become more and more difficult to come by as the amount of owners increase (1).


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Ryan Parsons
Sources: Michelmann and Heller, Buchanan and Yoon
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