Governing the Commons: Why Self-Administered Farm Outlets Flourish in Switzerland

Abstract

Investigations of the question why some commons flourish and why others fail is one of the most exciting and interesting topics in the social sciences. In this paper we take a look at the performance of self-administered outlets. In Switzerland, many farmers offer their products via self-administered outlets. Offering such an outlet is a trust game for the farmer and a commons dilemma for the customers. By law customers are required to pay for the products. However, in practice detecting and prosecuting shoplifting at outlets is almost impossible. Hence, for the customers paying the demanded price for a product is more or less voluntary and constitutes a social dilemma. If all pay, the outlet flourishes and provides convenient access to agricultural products. But shortsighted payoff-maximizing behavior suggests shoplifting which leads sooner or later to the disappearance of the self-administered outlet. Our study consists of 240 telephone interviews with farmers who either have an outlet, had one in the past but closed it, and of farmers who never had a self-administered outlet. We find that self-administered outlets increased in popularity in recent years and flourish very well in Switzerland. Farmers that offer a self-administered outlet place higher trust in others than farmers not having an outlet. Furthermore, outlets work well with respect to shoplifting and percent of demanded price paid under two conditions: if the outlet is monitored and if it contains inexpensive products as compared to more expensive ones. Hence, outlets work when the decision to pay is a low-cost decision for customers.

Keywords: self-administered outlets; commons; social dilemmas; cooperation; public good

JEL Classification: H4