On holiday weekends thousands of people picnic in state parks. Some picnic areas become so overcrowded the benefit or value of picnicking diminishes to zero. Suppose that the Minnesota State Park Service institutes a variable fee structure. On weekdays when the picnic areas get little use, the fee is zero. On normal weekends, the fee is $8 per person. On holiday weekends, the fee is $14 per person. The fee system corrects a problem known as the

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The fee system corrects the problem of the Tragedy of the Commons, which occurs when a resource is held in common and is therefore prone to overuse and degradation. In this case, the picnic areas are becoming overcrowded on holiday weekends, reducing the value of picnicking for everyone. By instituting a fee structure that varies based on demand, the park service can discourage overuse and ensure that everyone who wants to use the picnic areas can do so without overcrowding. The Coase theorem deals with the allocation of property rights and the free rider problem deals with the incentive to not contribute to a public good. The public goods problem deals with the provision of goods that are non-excludable and non-rivalrous.

On Holiday Weekends Thousands of People Picnic in State Parks