Strategic Management, Text and Cases by Pearson

368 STRATEGIC MANAGEMENT

Internalizing the external costs is the concept of bearing all the

external costs by those who reap the benefits of common resources.

In 1968, Garret Hardin wrote an essay, The tragedy of the commons,

describing a dilemma in which multiple individuals acting indepen-

dently, solely, and rationally consulting their own self-interest that will

ultimately destroy a shared limited resource even when it is clear that it is

not in everyone’s long-term interest for this to happen. Hardin illustrates

that free access and unrestricted demand for a finite resource ultimately

reduces the resource through over exploitation, either ...