Economic Analysis on the Tragedy of the Commons of River

Weikang Zhang, Weizhong Zeng, Xinhong Fu, Jimin Pan, Hong Guo

Abstract


The tragedy of the commons of river describes the plight of continuous exhaustion of the river resources. Its essence is because resources are excessive used. It takes the river pollution as an example in this paper, under the traditional hypothesis of classical economics, to analyze the reasons for the formation of tragedy of the commons of the rivers briefly, which is caused by repeated pollution actions among the inhabitants and the institution is important to solve it resultantly, in the view of game theory. Then, on the basis of New Institutional Economics (NIE), the discussion separately from microscopic, intermediate and macroscopic perspectives explores and answers what the institutions should be for tragedy of the commons of the rivers. Next is the case analysis of Jinhua River. It comes to the conclusions: the government could exploit planning mechanism and price mechanism generally, providing proper river property rights arrangement, to reduce various transaction costs and establish the river compensation system.


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Journal of Management and Sustainability   ISSN 1925-4725 (Print)   ISSN 1925-4733 (Online)

 

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