Common-property resources: privatization, centralization, and hybrid arrangements

This paper highlights Elinor Ostrom's innovative and important work on common-property resources (CPRs), which helped earn her the Nobel Prize in Economics. In particular, she showed that neither privatization nor centralization necessarily would fix resource misallocation in CPRs. Ostrom recognized that common owners often developed effective governance that limited access to the CPR and promoted efficient transfers among generations. Through myriad approaches, she identified factors that foster efficient governance in hybrid institutions that are neither market nor state controlled. I use some simple games to illustrate her insights.