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Abstract:
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"In this paper, I argue that in analyzing over-investment problems in commons, it is useful to discern a specific type of over-investment problem: one where clubs are involved. I use the term 'over-investment problem of clubs' to denote such cases, and the term 'over-investment problem of individuals' to denote cases where no club exists (for example, as is the case in the classical 'tragedy of the commons'). The crucial difference between the two is the types of production factors involved. The 'over-investment problem of individuals' emerges when the system includes only private goods, in addition to the common pool. By contrast, the 'overinvestment problem of clubs' emerges when the system includes not only private goods and the common pool, but also collective- or club goods.
Building on existing literature on collective action and E. Ostrom's design principles, I demonstrate that under a set of certain conditions, the problem of clubs is easier to solve than the problem of individuals. The argument is discussed in the light of Sami pastoralism in Lapland: for Sami reindeer-owners, clubs known as siidas provide their members with capital security for their privately-owned investments, thus solving their supply-side collective action problem.
The existence of clubs not only crucially affects the outlook of the over-investment problem in the commons but also may affect the likelihood of its solution. The presence of clubs may bring about several mechanisms which increase the likelihood of solving the over-investment problem. These mechanisms are discussed in detail and in light of Sami reindeer pastoralism."
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