Common Pool Resource - CPR

DEFINITION of 'Common Pool Resource - CPR'

A resource that benefits a group of people, but which provides diminished benefits to everyone if each individual pursues his or her own self interest. The value of a common-pool resource can be reduced through overuse because the supply of the resource is not unlimited, and using more than can be replenished can result in scarcity. Overuse of a common pool resource can lead to the tragedy of the commons problem.

BREAKING DOWN 'Common Pool Resource - CPR'

Common-pool resources, such as forests, are often managed by a combination of governments and markets. This can be done by only allowing a certain amount of the resource to be over a period of time, allowing for a core section of the resource to remain intact.


For example, a fishery can sustainably yield 100,000 pounds of fish annually, and the market price of a pound of fish is $4. Ten companies agree to harvest 10,000 each. In the absence of regulation, each company would harvest more than its allotted quota in order to sell more fish at $4 a pound. If each company over harvests by 1,000 pounds the fishery will over harvested by 10,000 pounds, and will not be able to produce the same level next year.

RELATED TERMS
  1. Common Resource

    A resource, such as water or pasture, that provides users with ...
  2. Reserves to Production Ratio

    A ratio indicating the remaining lifespan of a natural resource. ...
  3. Common Pool

    A resource or asset that is jointly managed or accessed by a ...
  4. Tragedy Of The Commons

    An economic problem in which every individual tries to reap the ...
  5. Natural Capital

    A reference to the stock of natural resources, such as water ...
  6. Resource Curse

    A paradoxical situation in which countries with an abundance ...
Related Articles
  1. Economics

    Scarcity

    Scarcity is the basic economic problem that arises because people have unlimited wants, but resources are limited. Because of scarcity, various economic decisions must be made to allocate resources ...
  2. Investing Basics

    Natural Resource Investing

    ETFs and futures are just some of the various investment options available to natural resource investors.
  3. Economics

    Economics Basics: What Is Economics?

    Before diving into economics first Investopedia explains the concept of scarcity and the differences between the two branches of study within economics: microeconomics and macroeconomics.
  4. Economics

    Understanding Tragedy of the Commons

    The tragedy of the commons describes an economic problem in which individuals try to reap the greatest benefits from a given resource.
  5. Economics

    What is a Nonrenewable Resource?

    A nonrenewable resource is a natural resource that once consumed cannot be readily replaced.
  6. Professionals

    Conclusion

    A listing of helpful resources for writing the SEE.
  7. Professionals

    Components of Marginal Product and Marginal Revenue

    CFA Level 1 - Components of Marginal Product and Marginal Revenue
  8. Professionals

    The Demand and Supply of Financial and Physical Capital

    CFA Level 1 - The Demand and Supply of Financial and Physical Capital
  9. Mutual Funds & ETFs

    A Complete Guide to Tax Loss Harvesting With ETFs

    Using exchange-traded funds (ETFs) to harvest tax losses can be a smart way to maximize your portfolio's tax efficiency.
  10. Economics

    Economics Basics: Conclusion

    Recap of the key learnings from Investopedia's economics tutorial .
RELATED FAQS
  1. How does horizontal integration allow companies to share resources?

    Learn how horizontal integrations allows companies to share resources. Understand specific examples of horizontal integrations ... Read Answer >>
  2. How can particular scarcities benefit specific stocks?

    Learn about scarce resources, such as crude oil and water. Explore how companies that produce these resources have benefited ... Read Answer >>
  3. How should you plan for scarcity when investing?

    Plan ahead for scarcity when you are investing so you can profit from emerging shortage trends and take advantage of prime ... Read Answer >>
  4. How do command economies control surplus production and unemployment rates?

    Find out how and why command economies fail, why full employment is possible under state compulsion and why overproduction ... Read Answer >>
  5. What are the main goals of human resources planning?

    Learn about human resource planning, a business strategy that heavily incorporates workforce considerations into long-term ... Read Answer >>
  6. How does Enterprise Resource Planning (ERP) assist in human resources planning?

    Read about how enterprise resource planning could help improve a company's human resources planning, both directly and indirectly. Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center