Commons and anticommons: two tragedies on common grounds

Recently, a new term has gained acceptance among law and economics scholars of property law: the ‘anticommons’. The concept, first introduced by Michelman (1982) and then made popular by Heller (1998, 1999), mirror images in name and in fact of Hardin’s (1968) well-known ‘tragedy of the commons’.

In situations where multiple individuals are endowed with the privilege to use a given resource, without a cost-effective way to monitor and constrain each other’s use, the resource is vulnerable to overuse, leading to a problem known as the tragedy of the commons. Symmetrically, when multiple owners hold effective rights to exclude others from a scarce resource, and no one has an effective privilege of use, the resource might be prone to underuse, leading to a problem known as the ‘tragedy of the anticommons’. As pointed out by Buchanan and Yoon (2000), the effects of the two problems are in many respects symmetrical.

The commons problem

If a depletable resource is open to access by more than one individual, incentives for overutilization will emerge. As the number of individuals en­joying free access grows larger relative to the capacity of the common resource, overutilization will approach unsustainable levels and the utilizers will risk the complete destruction of the common good. Although Hardin (1968) calls this destruction the ‘tragedy of the commons’, he credits a mathematical amateur, William Forster Lloyd (1794-1852), for formalizing it in a little- known pamphlet published in 1833 on population growth.

Since Lloyd, other economists have identified the problems associated with the common ownership of resources exploited under conditions of indi­vidualistic competition. Most notably, Gordon (1954) pointed out that without controls on entry, common resources will be exploited even at levels of negative marginal productivity.

The anticommons problem

The term ‘anticommons’ was coined by Michelman in his article ‘ethics, economics and the law of property’ (1982). Michelman defined the anticommons as ‘a type of property in which everyone always has rights respecting the objects in regime, and no one, consequently, is ever privileged to use any of them except as particularly authorized by others’ (Michelman, 1967), which had almost no counterpart in real-world property relations. The hypothetical example would be that of a wilderness preserve where any person has the authority to enforce the wilderness conservation laws and regulations.

Heller (1998) revitalized the concept in an article on the transition to market institutions in contemporary Russia, where he discusses the intriguing prevalence of empty storefronts in Moscow. Storefronts in Moscow are sub­ject to underuse because there are too many owners (local, regional and federal government agencies, mafia and so on) holding the right to exclude. The definition of the anticommons as employed by Heller is ‘a property regime in which multiple owners hold effective rights of exclusion in a scarce resource’ (ibid.: 668).

In the tragedy of the anticommons, the coexistence of multiple exclusion rights creates conditions for suboptimal use of the common resource.

As with the commons problem, the sources of externalities in an anticommons problem are also twofold. First, there are static (or current) externalities, in that the exercise of a right of exclusion by one member reduces or eliminates the value of similar rights held by other individuals. In price theory terms, one can think of this externality as the cross-price effect of the various exclusion rights. Second, the withholding of productive re­sources may create dynamic (or future) externalities, because the underuse of productive inputs today bears its consequences into the future, as standard growth theory suggests.