ABSTRACT
This chapter examines the following questions: We are therefore at the starting line defined by Hardin: how to govern common-pool resources when exogenous enforcement is not possible? It aims to answer to the above question by merging two approaches: analysis of free-riding problems in commons frameworks and analysis of hold-up problems in incomplete contract frameworks. The literature on incomplete contracts and that on tragedy of the commons have in common the problem of “authority failure” and the emerging of self-enforcing strategies to deter ex-post opportunism. A straightforward problem in the implementation of trigger strategies is that punishment of free-riders, always also inflicts economic damage on the victims of free-riders. This situation is particularly evident in the case of environmental policy games, as in our example of the lake. The chapter describes the commons symmetric game as a prisoner’s dilemma game where two identical agents - say two herders - have to coodinate their actions.
