Department of Economics

This article was written in celebration of Eleanor Ostrom's Nobel Prize. Standard economic approaches to the problem of overuse of common property resources have emphasized two competing remedies, the Pigovian approach of corrective taxation and the property rights approach of internalizing externalities by means of assigning marketable property rights to individual owners with exclusive claim on the entire commons. Elinor Ostrom pursues a third approach, which is based on case studies of existing communities that have established successful and durable systems of managing common property resources. This paper discusses her work and suggests that economists with an interest in public policy have much to gain from becoming familiar with the work of Ostrom and her co-authors.