Problem#1 Parta.Therearetwodecisionrightsallocationsthatareaffectingthistragedyofthecommons.The firstisthatstudentsparkingpermitsallowthemaccesstoanyparkingspotatanytimeofday, regardlessofthelevelofcongestion.Onestudentsuseofaparkingspaceconfersanobviousprivate benefit,whileitalsoimposesasocialcostontheotherstudentsintheformofonelessparkingspace 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 timesofday.Finally,theschedulingrightsoftheprofessorscouldbecurtailedaswell,andthe Universitycouldforcesomeprofessorstoscheduleclassesearlierinthemorningorlaterintheday. Alternatively,financialincentivescouldbeprovided,withprofessorsofferedsomeadditionalstipendfor voluntarilyschedulingcoursesoutsideoftheverypopularhours. Partb.Thepotentialforananticommonsproblemisdrivenbythefactthateachcriticalfunctioninthe businessprocessisunderthejurisdictionofaseparateunion,anyofwhichcouldcallastrikeandslow businessconsiderably,orevenbringittoahalt. Thetragedywilllikelymanifestitselfintheformoflong,costlynegotiationsbetweenVitesseandthe unions,andfairlyfrequentstrikes.Eachunionhasanincentivetodemandasignificantshareofthe availablesurplusintheformofhighwages,laxworkrules,shortworkdaysandhighlevelsofjob security.Ifalloftheunionsbargaintoohard(andfromtimetotime,theyareboundto),Vitessewillnot beabletogiveallofthemwhattheywantandstillremainprofitable. Vitessemightbeabletoalleviateitsanticommonstragedybyreducingthenumberofunionsitmust negotiatewith.Forinstance,engineersandaccountantsarebothwhitecollarjobs,andwouldlikely havesimilarinterests.Itmaybepossiblefortheirtwounionstomerge.Similarly,themanufacturers,

truckdriversandmaintenancecrewsareallbluecollarjobs,alsowithsimilarinterests.Amergeoftheir unionsmaybepossibleaswell.ThiswouldresultinjusttwopartiesforVitessetonegotiatewith.Even ifunionmergerswerenotpossible,Vitessetheunionsmightbewillingtonegotiatejointly,whichcould reducethelikelihoodofastrike.Vitessecouldalsodiscouragehardbargainingfromitsunionsbytrying tocreatesomecompetition(i.e.,breakdowntheunanimityrequirement).Forinstance,ifthereismore thanoneengineersunion,Vitessecouldthreatentoswitchtheunionitdoesbusinesswithifthereisa strike.Itmightevenbeabletothreatentohirenonunionizedlabor(althoughFranceslaborlaws wouldlikelynotallowit).Evenifneitheroftheseisaviableoption,thecompanymightbeableto introducecompetitionbybuildinganynewfactoriesinothercountries,suchasGermanyortheUnited States.Thiswouldallowittoshiftsomeofitsproductiontoitsforeignholdingsifastrikewasholding updomesticproduction(andviceversa).