The Tragedy of the Commons will be evident when a growing number of sheep grazing on the town commons leads to a destruction of the grazing resource.To correct for this problem,the town could
A) allow individual shepherds to chose their own flock sizes.
B) internalize the externality by subsidizing the production of sheep's wool.
C) auction off a limited number of sheep-grazing permits.
D) wait until the market corrects the problem.

Question

Quizplus · Accepted Answer

Auctioning off a limited number of sheep-grazing permits will ensure that the number of sheep grazing on the common is limited and sustainable. This limits the Tragedy of Commons, as overgrazing will no longer occur. Allowing individual shepherds to choose their own flock sizes or waiting for market correction may not solve the problem of overgrazing. Internalizing the externality by subsidizing wool production may encourage more sheep grazing, exacerbating the problem.

The Tragedy of the Commons Will Be Evident When a Growing