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Problem#1Parta. Therearetwodecisionrightsallocationsthatareaffectingthistragedyofthecommons. Thefirstisthatstudentsparkingpermitsallowthemaccesstoanyparkingspotatanytimeofday,

regardlessofthelevelofcongestion. Onestudentsuseofaparkingspaceconfersanobviousprivate

benefit,while

it

also

imposes

asocial

cost

on

the

other

students

in

the

form

of

one

less

parking

space

available. Second,professorshavetherighttoscheduletheirclasseswhentheyseefit. Whena

professorschedulesherclass,sheislikelyconsideringhowitstimingaffectsherschedule,andweighing

thebenefitsofholdingclassinthelatemorningorearlyafternoon. Whatsheisunlikelytoconsideris

thecostsheisimposingonstudentsoutsideherclassintheformofincreaseddemandforparkingat

thattime,andacorrespondinglackofavailableparkingspaces.

Thetragedywillalmostcertainlymanifestitselfintheformofhighparkingcongestionduringthelate

morningandearlyafternoon. (Ironically,outsidethesetimestheparkinglotmayactuallybe

underutilized.) Manystudentswillholdparkingpermits,butthepermitswilldothemlittlegoodwhen

therearesomanyotherstudentstakinguptheavailablespaces. Somestudentsmayresorttoarriving

atcampuswellbeforetheirclassesstartinanefforttobeattherush,whichwouldimposeapotentially

significantopportunitycostontheirtimeandintensifythecommonstragedy.

Thecommonstragedycouldbealleviatedthroughseveralpotentialmechanisms. Raisingthepriceof

parkingpermitswouldreducethenumberofpermitssold,resultinginfewerownersofthecommon

resource. Studentswouldhaveastrongfinancialincentivetobuyapermitasagroupandcarpoolto

campus. Avariationonthiswouldbetosellspecificpermitsfordifferentparkingstructures,makingthe

moredesirablylocatedstructuresmoreexpensivetoparkin. Thenatureofthedecisionrights

conferredbythepermitsmightalsobechangedinotherways. Forinstance,apermitmayonlyallowa

studenttoparkoncampusfor4hoursduringtheday,oronlyoncertaindaysoftheweek,orcertain

timesof

day.

Finally,

the

scheduling

rights

of

the

professors

could

be

curtailed

as

well,

and

the

Universitycouldforcesomeprofessorstoscheduleclassesearlierinthemorningorlaterintheday.

Alternatively,financialincentivescouldbeprovided,withprofessorsofferedsomeadditionalstipendfor

voluntarilyschedulingcoursesoutsideoftheverypopularhours.

Partb.Thepotentialforananticommonsproblemisdrivenbythefactthateachcriticalfunctioninthebusinessprocessisunderthejurisdictionofaseparateunion,anyofwhichcouldcallastrikeandslow

businessconsiderably,orevenbringittoahalt.

Thetragedywilllikelymanifestitselfintheformoflong,costlynegotiationsbetweenVitesseandthe

unions,

and

fairly

frequent

strikes.

Each

union

has

an

incentive

to

demand

a

significant

share

of

the

availablesurplusintheformofhighwages,laxworkrules,shortworkdaysandhighlevelsofjob

security. Ifalloftheunionsbargaintoohard(andfromtimetotime,theyareboundto),Vitessewillnot

beabletogiveallofthemwhattheywantandstillremainprofitable.

Vitessemightbeabletoalleviateitsanticommonstragedybyreducingthenumberofunionsitmust

negotiatewith. Forinstance,engineersandaccountantsarebothwhitecollarjobs,andwouldlikely

havesimilarinterests. Itmaybepossiblefortheirtwounionstomerge. Similarly,themanufacturers,

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truckdriversandmaintenancecrewsareallbluecollarjobs,alsowithsimilarinterests. Amergeoftheir

unionsmaybepossibleaswell. ThiswouldresultinjusttwopartiesforVitessetonegotiatewith. Even

ifunionmergerswerenotpossible,Vitessetheunionsmightbewillingtonegotiatejointly,whichcould

reducethelikelihoodofastrike. Vitessecouldalsodiscouragehardbargainingfromitsunionsbytrying

tocreatesomecompetition(i.e.,breakdowntheunanimityrequirement). Forinstance,ifthereismore

thanone

engineers

union,

Vitesse

could

threaten

to

switch

the

union

it

does

business

with

if

there

is

a

strike. Itmightevenbeabletothreatentohirenonunionizedlabor(althoughFranceslaborlaws

wouldlikelynotallowit). Evenifneitheroftheseisaviableoption,thecompanymightbeableto

introducecompetitionbybuildinganynewfactoriesinothercountries,suchasGermanyortheUnited

States. Thiswouldallowittoshiftsomeofitsproductiontoitsforeignholdingsifastrikewasholding

updomesticproduction(andviceversa).