Who Needs Formal Institutions to Manage the Commons? The Rural Charters in Northern Italy.

The charters used my some rural communities in Northern Italy made it costly for single members to abandon the community by establishing a specific form of property rights on the commons and making the right to return sometimes restricted. Content of the communal ownership rights locked-in peasants in a community and ensured long-term relationships. Long term relationships of insiders was not a condition that occurred naturally, it was an intended consequence of the type of property rights arrangement they chose. There was also no individual right to succession from the community. A person could leave but no claim could be made of community common resources. Individuals had the right to use common resources according to rules and could participate in shaping rules but only the group could decide to rent or sell common land or to partition it and assign parts to individual use. To do these things however, they had to have the consent of the wide majority.

In the rural charters of the Fiemme Valley community there were provisions to stop immigration and trespassing from outsiders. This was aimed to prevent free riding by outsiders. Immigration was kept under control by request of an annual fee for using Commons and the acceptance of newcomers by the community . Trespassing was illegal and appointed guards were in charge of enforcement. If trespassers were caught they had to refund the market value of what they were attempting to steal plus an added penalty. So, while catching the trespassers gave the community a benefit, the detection and conviction of the trespasser was costly to them. This forms a type of game model in which each player must determine their payoffs and their level of involvement. This would vary for the trespasser depending on their indifference curves which is why trespassing still happened regardless of the risk. The max fine was set by a political authority, the Prince of Trento.

The preference for formal over informal regulation made by the Trentino commons may have been because of the imperfect information condition. With informal regulations there would have had to be a way for the community to keep an eye on each other and keep each other notified if someone stepped out of line and broke a rule. With the technology of the time however, that would have been difficult to achieve. It is possible that formal regulations could have performed better than informal regulations on efficiency grounds but both were sub-optimal because to implement would incur cost to the community.

 While in Cavalese we also saw a lumber yard where they process the trees in the commons that are owned and cut down by the Fiemme Valley community. It is interesting to see that even after all this time they are still operating in this way without over exploiting their resources. The valley community has a limit of how many trees they can cut down based off the growth of the forest. They cannot cut down more trees than how much the forest expands each year. This has allowed their entire economy to continue running by ensuring they do not exhaust their resources.