Consequences of Social and Resource Heterogeneity in Endogenous Institutions

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2012

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Abstract

"This paper examines the consequences of within-group societal and resource heterogeneity on private order institutions for the management of the commons. The hypothesis tested is that heterogeneity increases the costs of social contracting for defining and enforcing property rights, thereby affecting the process of institutional design and its stability. To test this hypothesis, I exploit the diversity exhibited by 159 self-governing communities that wrote and voted on community bylaws to manage their common resources in the Italian Alps during 1245-1801. Several proxies of institutional complexity are developed, based on a rich body of community bylaws: statistical analyses are conducted on a sample of 8,994 coded bylaws articles and data concerning 7,765 attendees in 260 legislative assemblies. The two measures of heterogeneity employed are the diversity of surnames in the group of those who vote and directly benefit from the legislation, and the diversity of communities in terms of natural resources. After controlling for group size, it is found that both surname and resource fractionalization had an impact on the design and stability of institutions. In larger groups a weaker stability of institutions is also found, as they struggled more to reach a wide consensus."

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heterogeneity, institutions, management

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