1)Explain the nature of the externality associated with common pool resources (like open ocean tuna, clean air, and freshwater).

 

1)A common pool resources is a type of resource which proves to be beneficial for the society as a whole but it can also result in diminished benefits to everyone in the society if an individual starts using it to pursue his self interests. These type of resources often exhibit the problem of tragedy of commons. The common pool resources are non excludable but rival in consumption. This means that no individual can be stooped from using the resources, but at the same time the consumption of one individual can reduce the availability of resource for consumption by others. This results in the problematic situation where overuse by one individual, can significantly reduce the amount of consumption by others. For Example: Suppose a village has a freshwater lake, with ample amount of freshwater fish. Since the freshwater lake is a common resource for the entire village, no one can be excluded from using it for the purpose of fishing. But suppose some individual from the village, engages in over fishing, this will tend to reduce the quantities of fish available for others, which will diminish benefits for others.