Lueck 8 Miceli-Property Lato Dissipation from internal capture can be limited by maintaining a homogeneous membership With equal sharing rules, a homogeneous membership maximizes the present value of a common property resource(Lueck 1994, 1995). Once a group chooses an equal sharing rule there is an incentive to maintain homogeneity. With heterogeneous members and equal shares, highly productive individuals will supply too little effort and the less productive will supply too much compared to a homogeneous equilibrium, so dissipation will increase. In effect, equal-sharing rules increase group wealth with homogeneity among group members. This provides an economic rationale for preserving homogeneity by screening potential members, by indoctrination, or by restricting the transfer of memberships There are other potential limits on the capture behavior of individual common property owners that are not considered by the above model. For example, if group members expect to interact over long periods the incentive to overuse the resource may be limited by the desire to maintain a productive relationship. Accordingly, customary rules can evolve that restrict members, for instance, by limiting the size of private herds on a common pasture( Rose 1986, Smith 2000) For common resources that are attached to land such as oil, game, and water, ownership of the land can limit access to the resource. In effect, the group is the set of private landowners whe have access to the common resource. In this case, private contracting to consolidate land holdings is a possible solution to the ownership problem for the attached resource Libecap and Wiggins 1984, Lueck 1989) Another benefit of group ownership, besides internalizing externalities, is risk sharing. Group ownership of land spreads the risk of uncertain events like crop failure, thereby providing a form of insurance(Ellickson, 1993). Group ownership also promotes egalitarianism, or equal sharing of output, which historically has been the motivation for various communal societies( Cosge Miceli, and Murray, 1997). But, as discussed above, these benefits must be weighed against the cost of group ownership in the form of diluted incentives for effort It is difficult to know how important common property regimes are in modern economies Certainly families and other close knit groups routinely use common property rights to govern resources. The lobster gangs of Maine are perhaps the most famous case. a growing sector of the housing market is comprised of so-called common interest communities, like condominiums, cooperatives, and homeowner's associations, in which residents use a quasi- governmental structure for maintaining common areas(e.g, fitness rooms, pools, trails, open further discussion in Section 7. 5. Common property seems to be less typical in businesythe space)and providing certain local public goods(Dwyer and Menell, 1998: 807-887).(See perhaps because group ownership leads to costly transfers of rights that must ultimately be governed by political decision making. It may also be true that large-scale enforcement by the state(i. e, courts, police) has usurped the major advantage of common property. In water law, On the other hand, there are problems when resource rights are tied to land ownership. For example, further parcelization of land can exacerbate the rule of capture as it has done with oil discovered in urban areas. In addition linking rights can create incentives for further parcelization. For instance, under riparian doctrine linking water to land sometimes yields long, narrow"bowling alley"parcels designed to extend water rights to many users Dukeminier and Krier 2002) Smith(2000) finds little support for the risk sharing thesis in the context of the medieval open fields systemLueck & Miceli – Property Law 10 Dissipation from internal capture can be limited by maintaining a homogeneous membership. With equal sharing rules, a homogeneous membership maximizes the present value of a common property resource (Lueck 1994, 1995). Once a group chooses an equal sharing rule there is an incentive to maintain homogeneity. With heterogeneous members and equal shares, highly productive individuals will supply too little effort and the less productive will supply too much compared to a homogeneous equilibrium, so dissipation will increase. In effect, equal-sharing rules increase group wealth with homogeneity among group members. This provides an economic rationale for preserving homogeneity by screening potential members, by indoctrination, or by restricting the transfer of memberships. There are other potential limits on the capture behavior of individual common property owners that are not considered by the above model. For example, if group members expect to interact over long periods the incentive to overuse the resource may be limited by the desire to maintain a productive relationship. Accordingly, customary rules can evolve that restrict members, for instance, by limiting the size of private herds on a common pasture (Rose 1986, Smith 2000). For common resources that are attached to land such as oil, game, and water, ownership of the land can limit access to the resource. In effect, the group is the set of private landowners who have access to the common resource. In this case, private contracting to consolidate land holdings is a possible solution to the ownership problem for the attached resource (Libecap and Wiggins 1984, Lueck 1989).35 Another benefit of group ownership, besides internalizing externalities, is risk sharing.36 Group ownership of land spreads the risk of uncertain events like crop failure, thereby providing a form of insurance (Ellickson, 1993). Group ownership also promotes egalitarianism, or equal sharing of output, which historically has been the motivation for various communal societies (Cosgel, Miceli, and Murray, 1997). But, as discussed above, these benefits must be weighed against the cost of group ownership in the form of diluted incentives for effort. It is difficult to know how important common property regimes are in modern economies. Certainly families and other ‘close knit’ groups routinely use common property rights to govern resources. The ‘lobster gangs’ of Maine are perhaps the most famous case. A growing sector of the housing market is comprised of so-called ‘common interest communities,’ like condominiums, cooperatives, and homeowner’s associations, in which residents use a quasi￾governmental structure for maintaining common areas (e.g., fitness rooms, pools, trails, open space) and providing certain local public goods (Dwyer and Menell, 1998: 807-887). (See the further discussion in Section 7.5.) Common property seems to be less typical in business, perhaps because group ownership leads to costly transfers of rights that must ultimately be governed by political decision making. It may also be true that large-scale enforcement by the state (i.e., courts, police) has usurped the major advantage of common property. In water law, 35 On the other hand, there are problems when resource rights are tied to land ownership. For example, further parcelization of land can exacerbate the rule of capture as it has done with oil discovered in urban areas. In addition, linking rights can create incentives for further parcelization. For instance, under riparian doctrine linking water to land sometimes yields long, narrow "bowling alley" parcels designed to extend water rights to many users (Dukeminier and Krier 2002). 36 Smith (2000) finds little support for the risk sharing thesis in the context of the medieval open fields system