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Emergence of Endogenous Legal Institutions: The Rural Charters in Northern Italy

Casari, Marco (2000) Emergence of Endogenous Legal Institutions: The Rural Charters in Northern Italy. Social Science Working Paper, 1105. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20170807-161707482

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Abstract

Common-pool resources create a well-known social dilemma, and to solve the problem the recent literature in economics has focused on how repeated interaction can promote informal cooperation without the need for formal legal or political institutions. This paper examines a particular example of a common resource: common property in alpine communities of Northern Italy between the 13th and the 19th century. There, rather than relying on repeated interaction alone, users created formal mechanisms that regulated behavior and access to the common property via quotas and time restrictions. Because the formal institutions existed side by side with the sort of repeated interaction that would bread informal cooperation, there was a paradoxical redundancy of institutions. On one hand, formal regulations were probably the best way to limit the overuse of the commons. We consider the tradeoff between developing formal regulations versus relying on informal cooperation. Under certain conditions, the cost of building formal institutions is repaid by a large gain in efficiency. On the other hand, the users themselves had to create and administer the formal institutions, and since the benefits of formal regulations are a public good, each individual has an incentive to free ride. The collective action problem of providing regulatory services was surmounted thanks to the repeated interaction among users. The paradox is thus resolved.


Item Type:Report or Paper (Working Paper)
Additional Information:Preliminary version, comments are welcome. I wish to thank Philip Hoffman, Simon Wilkie, Matthew Jackson, Paolo Ghirardato, Alvaro Gonzalez Staffa, and Jose Apesteguia for their valuable comments. All errors are mine. This research was financially supported by the Division of the Humanities and Social Sciences of the California Institute of Technology. A previous version of this paper has circulated with the title: “Who needs formal regulations to manage the commons? The rural Charters in Northern Italy”. This version of the paper has benefited from the comments of the participants to the Summer School of the European Historical Economics Society in Lund, Sweden and to the Eighth IASCP conference in Bloomington, Indiana.
Group:Social Science Working Papers
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Caltech Division of Humanities and Social SciencesUNSPECIFIED
Series Name:Social Science Working Paper
Issue or Number:1105
Record Number:CaltechAUTHORS:20170807-161707482
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20170807-161707482
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79883
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:08 Aug 2017 03:05
Last Modified:03 Oct 2019 18:25

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