Guest post from Jim Roumasset:
Congratulations to Prof. Ostrom. According to an NPR story, "Ostrom's work challenged conventional wisdom, showing that common resources can be successfully managed without privatization or government regulation." Lest today's prize be misinterpreted, let's go back to "The Tragedy of the Commons." Hardin did not say that tragedy is inevitable. One of his subsections is entitled, "Mutual coercion, mutually agreed upon," which logically admits local governance as a possible solution. As far as I know, however, the comparative-institutions questions remain to be answered. Under what conditions, is privatization, government regulation, or common-property governance optimal? Under what conditions will one or the other emerge? I hope that yesterday's prize will incentivize economists to find the answers.
