Antitrust and The Commons: Cooperation or Collusion?

Antitrust and The Commons: Cooperation or Collusion?

June 01, 1997

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People have long been aware that unbridled access to natural resources could result in ruin for all. Whether by custom, kinship, or ownership, people found ways to assign limited rights for the sharing of pastures, streams, and hunting grounds. The story of property rights, whether common, public or private, is a story about limiting access to otherwise common-access resources.

Efforts to sustain stocks of species and increase productivity of natural resources inevitably lead to an access restriction. In the absence of rules for managing common-access resources, initial output will be higher and prices at first will be lower. Eventually, unbridled use will destroy a pasture, fishery or wildlife population. Access restrictions when imposed systematically assure long periods of sustained environmental use and can avoid the tragedy of the commons.

The "Tragedy of the Commons" is defined as, "a resource used by a number of individuals but is unrationed by rules, custom or property rights." As demand for the resource increases, and its existance is threatened, society runs the risk of losing the resource. Yet individuals are motivated to respond by increasing their use of the resource. For the resource to survive, access must be rationed by formal or informal means. However, in the minds of some, rules, customs, and property rights that limit access and production raise the specter of monopoly control.

But the perception of monopolizing is a different matter from the fact of monopoly. In any event, we live in a world with antitrust statutes, which can make socially beneficial conservation efforts a risky business. Actions taken to avoid a tragedy of the commons can trigger antitrust investigations. Although restrictions to conserve a natural resource may seem indistinguishable from blatant efforts to raise price and gain monopoly profits, the underlying logic for the two actions is entirely different. Successful cooperative efforts to conserve a common-access resource yield an increase in wealth and social well-being. On the other hand, it is widely argued that collusive efforts to monopolize markets yield a net reduction in social well-being, while redistributing wealth from consumers to producers.

This paper argues that the tragedy of the commons represents a real problem in many areas of natural resource and environmental protection and that current antitrust laws inhibit society’s ability to resolve those problems efficiently and creatively. At a minimum, antitrust authorities should become aware of the conflict in these two policy areas and be more receptive to environmental reasons for organizing cooperative access restrictions. Barring more fundamental changes in antitrust law, exemptions should be provided to cooperative endeavors undertaken for conservation and pollution control purposes. These exemptions should be similar to those now granted to labor arrangements, research and development ventures, baseball, and many other activities in the economy. The threat of wasted and destroyed fisheries, loss of species, and diminished water quality in rivers is real; the possibilities for associated monopoly restrictions that impose meaningful costs on the economy are purely speculative and, if achieved, are apt to be small and fleeting.