Monday, December 22, 2008

The tragedy of the commons of the Festival of Lights Parade

In 1968, Garrett Hardin wrote that "the inherent logic of the commons remorselessly generates tragedy," using the example of an unregulated cow pasture to demonstrate how individually rational exploitation of a shared resource tends to the lead to the destruction of that resource.

Kudos then, to the Los Altos Festival of Lights Parade Association for recognizing that the free-for-all claiming of space on downtown sidewalks in advance of the Festival of Lights parade presented a commons problem that would inevitably descend into mayhem without some form of regulation or management.

The Town Crier did an impressive job of publicizing the new rules, and its follow-up report (which seems to be at least temporarily inaccessible online) indicated that people followed them, if somewhat reluctantly.

As much as I would like to congratulate last year's civic clean-up squad for helping spur this development and ensuring that Los Altos no longer looks like an emergency shelter, I am disappointed that I won't get to see Erik Koland tape off all downtown sidewalks using Spanish surnames. Just imagine the reaction that would have elicited.

6 comments:

Anonymous said...

Almost too much economics here NOE. Of course you applied the commons problem ( free public space) to a better issue than the biologist. Zero population growth? Where's the externality here. Free govt services?


The Professor

Happy said...

The only interesting sections of the guidelines from an economics standpoint are a and d; b is obvious, and c, e, f, and g are trivial. The fact that the sidewalk is a commons/the parade is a free public good isn't really the issue here since these guidelines don't ban outright the reservation of sidewalk real estate with lawn chairs or whatever.

Negative externalities are created when public costs exceed private costs. In this case, the cost of marking territory on the sidewalk that individuals doing so pay in time and convenience is less than the cost everyone else (the public) pays in inconvenience by not being able to find a place to watch the parade when they stroll into town around start time.

What guideline 'a' does is shift property rights from individuals who cared enough to arrive way ahead of time to claim territory to those same individuals plus people who only cared enough to arrive at 12:00 pm on the day of the parade. If no transactions costs existed, the early-birds would be willing to pay the 12:00 group for prime sidewalk real estate; they would pay exactly the amount they otherwise would have sacrificed in time and convenience by arriving even early, and the end result would be the same as if no time restriction existed.

Since guideline 'd' prohibits selling parade-watching real estate, transactions costs effectively become infinite. Two conslusions can be reached- on the surface, it increases private costs to early-birds, reducing the difference between private and public costs and thus reducing the externality. But in reality, because of the transaction ban, it moves some early birds into the public group, increasing the number of observers simply strolling into town and thus increasing the public cost; meanwhile, the private costs paid by the 12:00 pm group are now lower since they needn't arrive as far ahead of schedule as before to secure sidewalk real estate.

Higher public costs and lower private costs mean an even greater negative externality exists than before. This suggests these guidelines are ill-advised, even if the presence of taped-off stetches of sidewalk used to offend my psuedo-communist friends.

The solution may be a complete ban on reserving sidewalk space by any means other than personal presence, which would effectively shift property rights to bystanders. But this is Los Altos, so they'd have to keep the transaction ban in place to keep people from hiring day laborers to claim spaces.

Now THAT was too much economics.

Koland said...

First of all -- good God -- this took a long time to post. The parade took place a month ago.

To dissect the new rules, I see them as yet another patriotic
example of Los Altos protecting its citizens from terrorists--and as we know, the best way to safeguard a population from terror is to restricts the freedoms of that population.

The individuals who cared enough to arrive way ahead of time are mainly the same people who cared only enough to arrive at noon the day of the parade. These early birds did not abandon their intentions to claim spots, they simply had to wait to lay down their lawn chairs.

Granted, it's possible they may have faced may face more competition at noon from outsiders, but likely only marginally so. Noon is still six or seven hours before the parade begins, long before most spectators typically arrive.

The core impact of the new rules was basically to force a small group of people to litter the sidewalks of downtown Los Altos a day or two later than previous years.

Or more precisely: not overnight - when a would-be terrorist, or as our publisher (an unrepentant communist and liberal) refers, a "civic clean-up squad," could strike.

I'm curious if our foreign correspondent, who recently assisted me on an international pornography business deal, has an opinion.

Sleaz E

Nemesis of Evil said...

Professor, I think you've been spending too much time doing ballet recently. The externalities are pretty clear -- besides the inconvenience that Happy mentioned (perhaps better thought of an inequitable and inefficient division of viewing space determined by who has the time and temerity to claim public space as their own), this now former practice removed public space that could have been used for other things, such as,f or example, walking. If you believe some Town Crier letter writers, it also made Los Altos look like the Superdome.

Nemesis of Evil said...

Happy,

Your Coasean prattlings are inapplicable here. There never was (nor was there ever likely to be) a market for sidewalk viewing space -- the transaction costs (including the shamefulness of sellling) were too high. The public also has an interest from preventing any such market from forming, in order to preserve access for people regardless of ability to pay. So it is wrong to argue that the current arrangement is less efficient than before when they are effectively the same.

I do agree with you that parade-goers should have to claim to space in person. But we don't have any idea how these guidelines influenced people other than to keep the sidewalk clear for slightly longer. It's difficult to imagine that anybody else even knew about them. I know you economists aren't big on empirical evidence, but perhaps it's time for some original reporting.

Happy said...

NOE, you're looking at this too literally. If some dejected father stakes the claim on the sidewalk ahead of time and then gives seats to members of his family in return for their temporary approval and affection, that is a transaction in a non-pecuniary, if restricted, market. If one dad holds ground for two families one year in exchange for the other dad holding the ground the following year, where are the huge transaction costs? The traditional Coasean analysis was justified, but maybe a little too abstract for a law student.

Anyways, you're the one who made me "analyst" and not "fake news reporter" or "correspondent," so I think you owe me an apology for using the word "prattling."