Optimal Commons

Ciao!

To begin the series of article presentations and prep for our Italian Journey, Jake and I  started out with a few general economic topics, ours being the use of a commons. To provide some background and context for what a commons is and where it exists historically, we go back to the early English settlers in the 17th century. When they first settled in New England, as opposed to each having their own farmland they decided to farm the land in common, sharing their resources collectively, which is the perfect example of how a commons functions.

In the article, the author Barry Field attempts to tackle the two main questions of what is the optimal usage of a commons and what is the optimal number of commons to have. I will also do my best to draw connections to our first location of Venice throughout the blog.

When it comes to determining the optimal use rate of a commons, it all comes down to calculating the net revenue that is created from the commons, which is affected by a few factors, such as type of and size of the commons and finding the relationship it has with the transaction costs, which is the cost that it takes to get an individual to use less of the resource. In Venice, there is little too no agriculture compared to what we will see on the rest of our trip, so you wouldn’t see this example of sharing something like a farmland to grow crops such as we might in a place like Amalfi.

Tackling the second question, to determine the optimal amount of commons to have, there are different factors to consider. The way to find this is to compare the amount of revenue that can be made from having your own private land as a resource and comparing that too the marginal aggregate exclusion costs which is basically the cost to keep people from using your resources. The key thing to take into consideration here is to make sure that the cost to keep people out of your property never exceeds the revenue you are earning. Again to tie it into Venice, from what we have seen after a couple of days wandering through the streets, there wasn’t any apparent commons, but due the shared mentality that you see with the usage of the canal, I think the city’s culture would fit the mold of using a commons.

I’m looking forward to seeing what connections there are to the optimal commons on the rest of the trip!