Common Pool

DEFINITION of 'Common Pool'

A resource or asset that is jointly managed or accessed by a group rather than by an individual. Something that is considered to be part of a common pool is exploited by a group as a whole, but with the benefit passing to the individual and the cost spreading across the group. An asset considered to be common pool can be public, such as a river or forest, or private, such as money raised by a group to purchase an investment.

BREAKING DOWN 'Common Pool'

Assets and resources considered to be part of a common pool present a complicated problem. Members of the group benefit from the resource individually but bear costs collectively. A common pool resource, such as a river, may be used both to cool a manufacturing plant and by cities for drinking water. Both the manufacturing plant and the city benefits from the river jointly, but if the plant dumps pollution into the river it cannot be used by the city for drinking water. Common pool items are typically regulated in order to reduce the possibility of a tragedy of the commons situation.

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