Affecting the cost of animal feed and lowering the amount of milk from cows, the drought is pushing up milk prices.

The Tragedy of the Commons: Improving Your Reputation

Mar 22, 2013    •    243 Views    •    EST. TIME TO READ: 2 minutes

A small group of New Jersey winemakers has a problem. No one knows that they blend a gourmet product.

After all, say, “New Jersey” and no one thinks vineyard. Most New Jersey wine, with strong hints of blueberries, raspberries or cranberries is best on ice cream. How then to distinguish the good stuff from everyone else’s?

An economist would say that your plight resembles the tragedy of the commons. Wonderfully described by economics Nobel Prize laureate Elinor Ostrom,  the tragedy of the commons prevails when people destroy a common resource by overusing it. In a pasture, pursuing their individual interest, farmers tend to overgraze their animals. In a workplace refrigerator, we create a mess. What’s good for one is catastrophic when everyone does it.

Ostrom explained, though, that people can transform the tragedy of the commons into a solvable problem of the commons. Realizing it is in their best interest to create “collective action,” farmers voluntarily implement rules that preserve the pasture.

Although usually, the tragedy of the commons is associated with abusing common resources like our air, our water and the refrigerator we share at work,  NJ fine wine makers face a similar situation.  Voluntarily, they too need to cooperate because their common reputation has been abused. Through “collective action” they can disassociate themselves from the NJ commons that is associated with low quality. And that is precisely what they have done. Rebranding their region, fine wine makers in NJ have established the Outer Coastal Plain Vineyard Association. If they can get consumers to associate O.C.P. with fine wine, then, they can enter the field in which Napa Valley and French wines dwell.

Sources and Resources: I first started thinking about NJ wines and the tragedy of the commons after reading a NY Times Magazine article from Planet Money’s Adam Davidson. It returned me to Elinor Ostrom and this great podcast interview after she won her Nobel. I especially recommend the podcast because Dr. Ostom recently died and she was a very interesting lady.

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