Local common property exploitation with rewards

This paper analyses coalition formation in a livestock-pasture system where livestock are privately owned and the pasture is a common property. While the standard models on coalition formation predict rather low prospects of cooperation, this paper introduces a cost advantage of cooperation based on Saami reindeer herding which may explain higher coalition participation. In contrast to the existing fishery literature on coalition formation, all players are assumed ex ante homogenous, but may differ ex post due to the cost advantage. A stable equilibrium with cooperation can be reached and a moderate exploitation level can be sustained compared to the ‘tragedy of the commons’ outcome.