Markets <i>may</i> be good at preventing tragedies of the commons, but they may also fail to do so.<p>Consider the case of a lake fished by several fishing boats. Each fishing boat consumes a percentage of their daily catch and sells the rest for profit. The nature of the lake makes it a zero-sum resource: if one fishing boat catches more fish, it means less fish for the others.<p>The problem: every fishing boat has a short-term incentive to overfish, since more fish lead to more profits. This incentivizes every fishing boat to catch as much fish as possible, until there&#x27;s no more fish. That&#x27;s the tragedy of the commons, and there&#x27;s nothing the market can do to fix this.<p>By the way, I didn&#x27;t make up this scenario. There&#x27;s a ton of examples of this exact same thing happening all over the world, not just with fisheries but with any kind of shared resource (&quot;the commons&quot;). You can read more here: <a href="http:&#x2F;&#x2F;www.dummies.com&#x2F;how-to&#x2F;content&#x2F;ten-reallife-examples-of-the-tragedy-of-the-common.html" rel="nofollow">http:&#x2F;&#x2F;www.dummies.com&#x2F;how-to&#x2F;content&#x2F;ten-reallife-examples-...</a>