Multiple Interactions and the Management of Local Commons

Abstract

We provide a model in which small and relatively isolated communities can successfully manage local commons informally in circumstances where larger or less isolated communities could not do so. The reason for this is the non-anonymous nature of many interactions between the members of a small and isolated community. Such communities may be able to use these multiple interactions to enforce informal restrictions on the usage of local commons. To the extent that the process of economic development reduces the number of non-anonymous interactions among community members, it will reduce the ability of the community to successfully manage the local commons informally. The resulting need for either explicit regulation or the introduction of private property rights represents a hidden cost of development.

Keywords: Common Property resources, Contemporaneous Interaction, Economic Development, Externalities, Property Rights, Repeated Interaction, Temporal Interaction

JEL Classification: C72, C73, D02, D62