resources which are not owned, either privately or by the state, but are left open for free use by all comers. Examples include the air, fishery resources at sea, and public highways. As there is no price on using them, every user has an incentive to use them until the private marginal return falls to zero. If the resources are in unlimited supply, this is efficient; but if each user in fact reduces the supply available for others, it is not efficient, but leads to over-utilization, and in extreme cases such as over-fishing to the destruction of the resource. ‘The tragedy of the commons’ refers to the dangers of over-exploitation of resources due to lack of property rights over them. Beyond a certain intensity of use, some form of rationing of the use of ‘commons’ becomes necessary for efficiency. This may be done by quantitative allocation, or by levying a charge for their use.

• long run
• long-run average cost
• long-run marginal cost
• long-run Phillips curve
• long-term interest rate
• long-term unemployment
• Lorenz curve
• loss
• loss leader
• Louvre Accord
• loyalty, brand
• Ltd
• Lucas critique
• lumpiness
• lump of labour
• lump-sum tax
• luxury
• M0
• M1
• M2
• M3, M4, and M5
• M3, sterling
• Maastricht convergence criteria
• Maastricht, Treaty of
• macroeconomics