24 Pages Posted: 9 Feb 2015 Last revised: 15 Aug 2015
Date Written: February 9, 2015
In this symposium essay, I consider the role of resource segmentation — the natural or artificial division of resources into appropriable or contributable units — in eliciting and maintaining coordination in the absence of formal private property rights or top-down coercion. I argue that the appropriate segmentation of resources can reduce informal governance burdens and, by constructing choice sets, promote convergence between privately optimal and socially optimal choices. The effects on governance follow from the fact that segmentation, whether given by nature (fish, trees, pieces of fruit) or artificially constructed (boatloads, bushels, pie slices) provides a measuring rod for assessing draws on, or contributions to, common pools. In addition, when contributions to or withdrawals from a common pool take a chunky, discontinuous form, the private and social optimum may more readily converge on a single choice, despite the presence of externalities. This lumpiness in choices influences when externalities will be relevant to efficiency and can amplify the significance of policies and norms that edge decisions in socially desirable directions. Resource segmentation should, therefore, receive independent attention as a design element important to sustaining spontaneous order.
Keywords: common-pool resources, coordination, spontaneous order, governance, lumpiness, irrelevant externalities
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