The tragedy of the commons — in this textbook economics example, neglect, misuse and narrow self-interest famously transform a shared resource into one fit for no-one. The iron ore market’s common land is the index-based pricing mechanism that underpins billions of tonnes of trade. Everybody wants a pricing mechanism that works for all, yet few are willing to do the necessary maintenance.
Now the world’s largest buyer has finally had enough and looks in danger of abandoning the system altogether. The market should take note and act before irreparable damage is done.
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