Symmetric Tragedies; Commons and Anticommons

Abstract:     
An anticommons problem arises when there exist multiple rights to exclude. In a lengthy law review paper, Michael A. Heller has examined "The Tragedy of the Anticommons," especially in regard to disappointing experiences in efforts to shift from socialist to market institutions in Russia. In an early footnote, Heller suggests that a formal economic model of the anticommons has not been developed.

This paper responds to Heller's challenge. We analyze the anticommons problem in which resources are inefficiently underutilized rather than overutilized as in the familiar commons setting. The two problems are shown to be symetrical in several respects. We present an algebraic and geometric illustration and extend the discussion to several applications. More importantly, we suggest that the construction is helpful in understanding the sources of major value wastage in modern regulatory bureaucracy.

JEL Classifications: D70

Accepted Paper Series