Public Goods, Common Resources, and Market Failure (or not)
ECON-190 Principles of Economics
The Royal Swedish Academy of Sciences has written a brief summary of the work for which Elinor Ostrom and
Oliver Williamson won this year’s prize in economic sciences. The summary is called “Economic governance:
the organization of cooperation.” Read pages 1-3 on “Governing the Commons.”
1. According to standard economic theory, what happens if “markets” (no government intervention or
privatization) are used to allocate common resources? Explain.
2. What has Elinor Ostrom (one of this year’s Nobel Laureates in economics) taught us about the allocation
of common resources?
I don’t want to load you up with too much, so I won’t ask any more questions...but also read a brief article
written by Peter Boettke for the Foundation for Economic Education called “Elinor Ostrom’s Nobel Price
in Economics.” [Boettke is strongly libertarian in ideology. He is also an outstanding economic historian. If
you like the ideology, great. If not, filter through it and take away the rest.]
