A situation in which people acting individually and in their own interest use up commonly available but limited resources, creating disaster for the entire community.

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Tragedy of the Commons describes a situation where a shared, finite resource is drawn down because each person acts in their own self-interest, and the collective use ends up harming everyone. The resource is commonly available to all but limited in amount, so it’s rivalrous—one person’s use reduces what others can use—while it’s hard to exclude people from using it. With everyone trying to maximize their own gain, overuse accumulates and the resource can collapse, harming the whole community. Classic examples include grazing land, fisheries, and groundwater. This is different from the free rider problem, which centers on benefiting from others’ contributions to a public good without paying, and from the public goods problem, which involves under-provision of non-rival, non-excludable goods; market failure is the broad category that includes these and other inefficiencies, but the described scenario is a specific case of the tragedy of the commons.