Common property resource
The relationship between the returns to labour on a given resource
(e.g. cropland or a fishery) and the number of labourers exploiting it
Under private ownership For any additional employee hired beyond N*, the cost to the producer W will be greater than the employees’ marginal product, and the difference will represent a net loss to the owner. To maximise profit requires the hire of N* workers, with a total output equal to AP* multiplied by the number of workers, N*.
Under a system of common property Each worker is able to appropriate the entire product of their work, which is equivalent to the average product of all workers. Worker income will continue to exceed the wage (W) until enough workers are attracted to cause the average product to fall to the level of the wage, at which point the labour force = Nc. The implication is that aggregate welfare will fall and resource use is inefficient (and causes degradation).
Sources: Drawn from several sources, including Todaro (1994: 338–339)