Markets may be good at preventing tragedies of the commons, but they may also fail to do so. Consider the case of a lake fished by several fishing boats. Each

Markets may be good at preventing tragedies of the commons, but they may also fail to do so. Consider the case of a lake fished by several fishing boats. Each fishing boat consumes a percentage of their daily catch and sells the rest for profit. The nature of the lake makes it a zero-sum resource: if one fishing boat catches more fish, it means less fish for the others. The problem: every fishing boat has a short-term incentive to overfish, since more fish lead to more profits. This incentivizes every fishing boat to catch as much fish as possible, until there's no more fish. That's the tragedy of the commons, and there's nothing the market can do to fix this. By the way, I didn't make up this scenario. There's a ton of examples of this exact same thing happening all over the world, not just with fisheries but with any kind of shared resource ("the commons"). You can read more here: http://www.dummies.com/how-to/content/ten-reallife-examples-of-the-tragedy-of-the-common.html http://www.dummies.com/how-to/content/ten-reallife-examples-...