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«Emergence of Endogenous Legal Institutions: Property Rights and Community Governance in the Italian Alps MARCO CASARI This article examines changes ...»

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Consider first the ability to monitor individual actions. Thefts from the private fields were widespread. There were frequent complaints of robberies of fruits and vegetables. In order to reduce this risk, the peasants adopted inefficient agricultural practices, such as tiny vegetable gardens located near houses and small areas devoted to orchards.55 It was not uncommon to prohibit overnight stays in the high mountain meadows and forests or outings during religious holidays.

The 1586 charter of Sanzeno explains that the aim of the rule was to avoid free riding on the common resource or thefts in individual plots.

Otherwise, given that everyone else in the community was observing the no-work custom, the free rider would have been difficult to catch.56 Consider now the ability to observe the overall cooperation level of the community. As an alternative to monitoring individual actions, a villager could have inferred what others had harvested, and thus whether they were cooperating, by simply observing the physical stock of the common forest or pasture. This information, however, was just an imprecise proxy of the community cooperation level. A farmer could observe the milk production of his cow after a day of grazing the common pasture and from the variations in milk quantity and quality draw some inference on the status of the common pasture. A walk into the forest may give a villager a good sense of the level of exploitation of the forest. However, the villagers did not know exactly how many trees were in the forest or the exact quantity of grass that was on the ground in comparison with the level to be found if the harvesting was optimal.

For references from community charters, see for instance Malosco 1593, c.25, 26 and Tres 1551, c.53, 54, and 55. Monteleone (1964), pages 34–37, provides clear evidence for the years 1810s when the community charters were abolished. Not only were grapes stolen, but the wooden supports from the vineyards as well.

Pieve di Sanzeno, 1586, chapter 23: “Item per tor via molti abusi et cative usanze et cativi costumi che per alcuni che per il passato si ha fatto, si statuisce che niuno della pieve non debba, né anco forestiero ardisca, di stare di notte, né dì di festa, eccetto che il gazaro, uno over più, in la montagna predetta ed massime nel tempo della segagion ed mentre è ancor il fieno nelli pradi: sotto penna de lire cinque per cadauna persona; ed se fosse rubato fieno ad alcuno over legnami over anco taiato legnami (...) che si imputi tal furto ed contrafacion a quello over quelli che si trovarono esser stati la note over il giorno di festa sul monte”, see Cagnò, 1587, c.43 for a more generic rule against working during holidays.

Casari Moreover, the resource stock estimate could have been private information instead of being publicly known. A case of private information would be if villagers sampled different areas of the common land and did not share their information with everyone else. If different villagers had different information, the informal cooperation solution could have been even less efficient.57 Given imperfect monitoring, the informal cooperation solution could have been suboptimal.

An additional challenge for a community engaged in informal cooperation was to agree on a specific level of cooperation. This coordination problem is particularly difficult when monitoring is not perfect because after having agreed on a cooperation level there may be disagreement on how to implement it. In particular, coordinating on an informal cooperation solution is likely more difficult for larger communities (Implication 1). One obvious reason is simply the number of heads. Another reason is that individual estimates about others’ cooperation level are more likely to be different in a larger community.

Implication 1 (Population) The larger the group, the higher the cost of coordination on informal punishment. Hence, communities with a large population are more likely to increase their efficiency by adopting a charter than small communities.

Additional issues of monitoring and enforcing cooperation are raised by outsiders trespassing on the common property. The communities of Romeno, Don, and Amblar could count on topography. The villagers owned in common a side valley mainly covered by forest. The valley was delimited on three sides by steep mountains and on the only side where access was feasible, the entrance was so narrow that villagers built a gate on it and provided the gate with a lock. As the 1459 charter states, the only key was kept in the church of the community of Romeno. The community governor could have easily controlled everyone who went into the valley to log trees and lock the door at the end of the season.58 Although based only on casual observation, it is apparent that borders between communities were actively chosen using natural barriers such as mountain ranges or rugged creeks to create obstacles for trespassers.

Such barriers were not always available to a single village but one can see various examples of communities composed of more than one vilFor a theoretical analysis see Kandori and Matsushima, “Private Observation”; Compte, “Communication”; and Mailath and Morris, “Repeated Games.” Romeno, 1459, c. 24: Item che la chiave della porta di Vallavena sia tenutta et conservatta nella sacrestia della chiesa di santa Maria di Romeno.

Emergence 209 lage, as in the example just quoted, that teamed up to exploit a better external border.





As already explained, there is a synergy between monitoring insiders and outsiders. When monitoring insiders is difficult, the informal cooperation solution is less efficient for those communities more subject to outsider trespassing. We conjecture that more remote communities were endowed with more natural barriers and had a lower density of potential trespassers.

Implication 2 (Remoteness) The more remote the community, in the sense of being farther away from towns and communication routes, the more efficient the informal cooperation solution.

The Private Order Solution The community charters emerged as a legal innovation to reduce the transaction costs involved in enforcing property rights on the land.59 The process was always initiated by the communities. The approval of a charter effected a partial delegation of judicial powers in economic affairs from the Prince’s courts to a local community, including the powers to inflict monetary sanctions on trespassers. The Prince did not allow any physical punishment, as those were under state jurisdiction and not to be delegated to simple villagers. Moreover, there was a mandated maximum cap on the monetary fine that could be inflicted on violators.

From the community standpoint, this decentralization lowered enforcement costs. In exchange for this more effective enforcement technology, the government asked for the transfer of a share of the collected fines, either one-third or one-half.60 The guards could generally retain a third of the fine paid by convicted persons, which provided an important incentive to engage in costly monitoring activities. Any insider could actually report violations and, if the person was convicted, that portion of the fine would go to him instead of going to the guard.61 The remaining two-thirds share of the The oldest known of such charters dates back to 1202 and was drawn by the small village of Civezzano, near the administrative center of Trento.

Sometimes the feudal lord appointed a regolano maggiore to oversee the other community officials and, possibly, to ensure that the community paid this share of the fines. The role of the feudal lord and the Prince was particularly important to ensure compliance of convicted outsiders. No additional trial was needed but cases of noncompliance would be referred to them.

For an experimental study of the Carte di Regola monitoring and sanctioning system see Casari and Plott, “Decentralized Management.” For an experimental study on the emergence of peer sanctioning institutions see Guererk et al., “Competitive Advantage.” Casari fine went either to the state government elites or to the community treasure.

A charter could boost efficiency not only by organizing the gathering of additional information but through fact-checking and informationsharing institutions.62 The simple community court proceedings were an effective way to distinguish baseless rumors from corroborated findings, hence resolving ambiguities that could have otherwise damaged the ability to sustain cooperation. The verdict was the “official truth” of the community that could have served as a coordination clue. Moreover, all charters indicate the need of regular meetings among the insiders to discuss common business. The meetings were often mandatory for everyone and unjustified absence was penalized with a fine. A public announcement in the meeting made any information common knowledge.63 This informational advantage alone may have justified the introduction of the charters.64 Another definite advantage was in effectively deterring trespassing.

There is evidence from the record of fines that a high fraction of them were incurred by outsiders. The 1677/78 administration booklet of the community of Coredo lists at least ten fines extolled from outsiders, oftentimes for cutting trees in the community forest.65 The 1589 administration booklet from the community of Mezzolombardo provides additional evidence that fines were actually inflicted.66 If a trespasser was caught, he had to refund the market value of whatever he harvested and in addition pay a penalty. Detecting a trespasser, bringing him to court, and collecting the fine was considerably easier when performed at the Some regulations imposed a re-organization of production to make actions more readily observable.

For instance, in some Bolivian communities that currently rely on informal sanctioning institutions, the leader of the village publicly announces when somebody has violated a norm about the use of the common resource. The announcement works as a coordination device to trigger the informal punishment by all the villagers. Oral communication by Marco Boscolo, June 2000.

Moreover, there was an economy of scope in monitoring insiders and outsiders, as the same guards could be employed to report both trespassing by outsiders.

From the Libri de Conti della Honoranda Comunità di Coredo: “ricevuto per condane fatte alli sottoscritti come forestieri” (1677–78). There are other reports of fines where it is not specified if the payment came from insiders or outsiders: “per due larici taliati nel ingazato, e venduti a Sfruz” (1672–73), “per haver tagliato un pez dent in sas nella sorte” (1673–74), “per il valor di legni menati dal monte con buoi forestieri senza licenza” (1677–78).

On 18 July 1589 the governor of the village recorded that a gentleman named Michel had been caught while illegally collecting firewood on common land. As a result, he had to pay a fine for an amount of troni (4) and carantani (10) in accordance with the community charter.

Libretto di Amministrazione (1589): “per una codanaza fatta per aver menado entro legna da le giare del nos,” which translates “for a penalty inflicted for having removed firewood from the bank of the river Nos.” The community charters of Mezzolombardo is reported in Devigili (1979). Most of these booklets went destroyed. We were able to find them for just two communities and for selected years.

Emergence 211 community level than by the state courts and allowed for a stricter enforcement of property rights.

A charter brought advantages in terms of information, a legal punishment technology for insiders, and effective enforcement toward outsiders. Still, it involved sunk costs for creating and maintaining it. Writing an official document such as a community charter involved nonrecoverable costs, as did spending time in the community meetings or serving as a community officer. If the potential surplus generated by the common property resources is small in absolute terms, the fixed costs to set up and run a private-order institution would not have been recovered.67 Implication 3 (Minimum size of the commons) Under the assumption of a fixed cost to set up and run a community charter, all other things being equal, the higher the value of the common resources, the higher is the potential gain from adopting a charter. In particular, with an endowment of common property below a given threshold, it would be more efficient to rely on informal cooperation than on a charter.

GOVERNANCE REGIME TRANSITION

Suppose there exist communities where a private-order governance regime is a more efficient arrangement than informal cooperation. One can simply assume the potential gains of a management regime are enough to drive its adoption. Thrainn Eggertsson calls this position the naïve theory of property rights.68 As an alternative, or in addition, one can identify and test empirically the role of possible obstacles toward an efficiency-improving transition.

Setting up a charter may involve solving a collective action problem.

Everyone would be better off with the charter but, as the individual effort is costly, nobody has an incentive to contribute to it. The actual process of establishing the charter resembled a social contract situation and hence voting could have overcome the dilemma that an unstructured group generally faces. A community charter had to pass two tests of consensus. First, the community assembly needed to agree on a set of rules through a supramajority voting procedure. Second, the local political authority, which in this case was the Prince of Trento, had the right to accept or reject the charter.69 A sufficient condition for implication 3 to hold is that charter creation and administration costs are less than proportional than the value of the common property benefits.

Eggertsson, Economic Behavior.

There are instances where a charter was approved under the condition that some specific provisions had to be changed. As it is for private contracts today, there was also a general framework of rules that no charter could contradict.



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