When access to a common property is unrestricted, why does the resulting social gain fail to be as large as possible? How can an entrance fee increase social gain in this situation?
What will be an ideal response?
As long as the value a person receives from the common property exceeds the marginal cost of using it, the number of people using the property will increase. Thus the last entrant to a common property receives zero net value from it; that person is indifferent regarding whether or not to use the common property. However, since use of a common property is rivalrous, the last entrant lowers the value that others receive from the property. Social gain would therefore increase if the last entrant can be given an incentive to choose to leave the common property. An entrance fee would give him such an incentive.
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