The two distinguishing characteristics of common resources, namely subtractability and non-excludability, lead to a number of different economic problems. Ostrom, Gardner and Walker provide a useful simplification that divides the problems associated with common resources into two separate classifications: appropriation and provision problems.
- An appropriation problem results when beneficiaries of a resource are presented with a dilemma of how to exclude others from the use of the resource and allocate the subtractable flow of the resource.
Types of appropriation problems:
Reference: A note on externalities
- A provision problem results when beneficiaries are faced with the problem of maintaining or developing a resource and preventing it from destruction.
Types of provision problems: