Common Pool

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Public Good

    A product that one individual can consume without reducing its ...
  2. Tragedy Of The Commons

    An economic problem in which every individual tries to reap the ...
  3. Common Resource

    A resource, such as water or pasture, that provides users with ...
  4. Blind Pool

    A limited partnership or stock offering with no stated investment ...
  5. Mortgage Pool

    A group of mortgages held in trust as collateral for the issuance ...
  6. Free Rider Problem

    1. In economics, the free rider problem refers to a situation ...
Related Articles
  1. Personal Finance

    5 Economic Concepts Consumers Need To Know

    A solid understanding of economics helps build a strong foundation in almost every area of life.
  2. Fundamental Analysis

    The Difference Between Finance And Economics

    Learn the differences between these closely related disciplines and how they inform and influence each other.
  3. Options & Futures

    Game Theory: Beyond The Basics

    Take your game theory knowledge to the next level by learning about simultaneous games and the Nash Equilibrium.
  4. Fundamental Analysis

    The Basics Of Game Theory

    Break down and examine the potential consequences of economic/financial scenarios.
  5. Economics

    What is the Breakeven Point?

    In general, when gains or revenue earned equals the money spent to earn the gains or revenue, you’ve hit the breakeven point.
  6. Investing

    What's Marginal Revenue?

    In microeconomics, marginal revenue is the additional revenue generated by increasing sales revenue by one unit. Another way of saying this is that the marginal revenue is the revenue generated ...
  7. Investing

    What is the Debt-To-Capital Ratio?

    The debt-to-capital ratio is used to measure a company’s use of financial leverage. The ratio is the company’s total debt, divided by the sum of the company’s equity plus total debt.
  8. Investing

    Understanding Accumulated Depreciation

    Depreciation is a rough approximation, in dollar terms, of the wear and tear on an asset. So the accumulated depreciation is the aggregate of the wear and tear on the asset from all prior time ...
  9. Professionals

    What is Backward Integration?

    Integration happens when one company owns another business in its supply chain.
  10. Investing

    What's a Distribution Channel?

    A distribution channel is a chain of businesses through which a manufacturer sends his products to get them to a final buyer. It may involve wholesalers, distributors, agents and retailers. Companies ...

You May Also Like

Hot Definitions
  1. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  2. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  3. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  4. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  5. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
  6. Absorption Costing

    A managerial accounting cost method of expensing all costs associated with manufacturing a particular product. Absorption ...
Trading Center