Which of the following scenarios best illustrates a company contributing to the global tragedy of the commons?

• A. A firm that pays for the use of a private resource and follows all regulations.
• B. A company that invests in renewable energy and reduces its carbon emissions.
• C. A fishing company that overharvests fish from international waters without regard for future stocks.
• D. A business that voluntarily limits its production to preserve a shared resource.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of the 'tragedy of the commons' — it occurs when individuals or companies overuse a shared, limited resource, leading to depletion or degradation because no one has exclusive ownership or incentive to conserve it.
2. Step 2: Identify the key elements in each scenario: whether the company is using a private or shared resource, if it follows regulations, and if it considers the long-term sustainability of the resource.
3. Step 3: Analyze the first option: a firm paying for private resource use and following regulations. Since the resource is private and rules are followed, this does not illustrate the tragedy of the commons.
4. Step 4: Analyze the second and fourth options: companies investing in renewable energy or voluntarily limiting production are actively conserving resources, which is the opposite of contributing to the tragedy of the commons.
5. Step 5: Analyze the third option: a fishing company overharvesting fish from international waters (a shared resource) without regard for future stocks perfectly illustrates the tragedy of the commons, as it leads to depletion of a common resource due to lack of regulation or enforcement.