Possibilities and limitations to cooperation in small groups: The case of group-owned wells in Southern India

This study examines the incidence of collective action for a range of activities associated with the use and management of group-owned wells in India. We find that while activities such as everyday allocation of water and routine maintenance are managed well by almost all sample groups, group members prefer to undertake large-scale investments individually in spite of the advantages of pooling capital and sharing risks. The paper attempts to explain why this is so by looking at the transaction costs associated with these activities. By distinguishing between different activities, the study provides sharper insights into the workings of informal mechanisms of cooperation. (C) 2000 Elsevier Science Ltd. All rights reserved.