What if market competition itself seeds market failure? In writing the paper “Win Together or Lose Alone: Circular Economy and Hybrid Governance for Natural Resource Commons,” that provocative question guided my exploration. The journey begins with the classic tragedy of the commons and the challenges of implementing circular-economy principles. Using a game-theoretic model, I demonstrate how unfettered competition among users of a natural-resource commons predictably leads to over-extraction, resource collapse, and collective loss. Traditional remedies—Pigouvian taxes, standards, property-rights assignments, and other classic economic policies—often produce unwanted side effects or prove insufficient. Instead, we propose employing networks of contractual agreements to alleviate competitive pressure and bind agents by contract to safeguard the common good.
I extend my deepest gratitude to Leonardo Becchetti and NeXt Nuova Economia for their invaluable collaboration, insightful guidance, and unwavering support.