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Common Pool Resources
Natural resources which are available for use for everyone, but are susceptible to overuse and depletion.
Demerit Good
Goods that are not socially desirable but are over provided by the market.
Externality
The spillover effects on third parties, due to actions of consumer or producers.
Merit Good
Goods that are desirable by society but are under provided by the market.
Negative Consumption Externality
Negative consumption externalities are spillover costs imposed on third parties from the consumption of a good, which are not reflected in the market price.
Negative Production Externality
Negative Production Externalities are spillover costs passed on to third parties from the production of a good, which are not reflected in the market price.
Positive Consumption Externality
Occurs when the consumption of a good/service leaves positive spillover effects on third-parties.
Positive Production Externality
When the production of a good/service has a positive spillover effects on third parties.
Socially Optimum Output
The level of production that achieves allocative efficiency, where the allocation of resources results in the most beneficial outcome for society as a whole, maximising social welfare.
Sustainability
The use of a resource at a rate which allows it to naturally regenerate, so it does not degrade or deplete.
The Tragedy of Commons
A situation where individuals, acting in their own self-interest, overuse and degrade a shared resource, causing long-term harm to the resource and society.