+1 862 207 3288 If property rights are not appropriately defined then result of economic interactions will include inefficiency which is called tragedy of commons.
Consider an agricultural village in which villagers graze their cow on a common field. Here, two different allocation mechanisms are compared.
1. Private ownership solution – In this allocation, there is just an individual who owns the field.
2. Common ownership – Field is owned in common by all the villagers.
Now, suppose that the cost of buying a cow ‘a’ and value of output is a function of ‘c’ i.e. f(c) & c denotes number of cows.
