oBikes suffered from the “tragedy of the commons”

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By Leith van Onselen

Bike sharing company oBikes has announced that it will leave Melbourne following the Victorian Government’s crack-down on the company, which classified abandoned bikes as litter and potentially liable for $3,000 fines. From The ABC:

…oBike announced it would abandon its problematic local hire scheme.

…the distinctive yellow bicycles quickly caused headaches as people dumped them on footpaths and streets.

Others have been thrown into waterways, including the Yarra River, found up trees and on roofs, and been converted into street art.

Lord Mayor Sally Capp said the City of Melbourne was now working with the company to remove the bikes.

She recommended people stop using the service…

Every morning as the sun rises I go for a long walk around my suburb of Ashburton. No matter what route I take – the Gardiners Creek trail, the local golf course, the Anniversary Trail, or through side streets – I am regularly confronted with abandoned oBikes.

In fact, during the recent Clean Up Australia Day, around half a dozen obikes were fished out of Gardiners Creek in the small stretch near the East Malvern Golf Course.

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To say these bikes had become an eyesore is an understatement.

It’s the same around the world, where similar bike sharing programs have failed. China, for example, has been forced to remove literally tens-of-thousands of dumped bikes from its cities. Whereas in the UK, bikes have been hacked, vandalized and thrown on railway tracks.

oBikes is a neat case study in the “tragedy of the commons”: an economic theory coined in 1833 by the British economist William Forster Lloyd that describes a situation where individuals using a shared resource often act according to their own interests and to the detriment of the shared resource.

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Basically, because nobody owns or values the bikes, and there is little threat of punishment, some people have treated the bikes poorly to the detriment of everybody else.

It’s one of the key roadblocks of a ‘sharing economy’: ensuring that ‘shared’ items are used in an appropriate manner that maximises overall wellbeing.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.