Collective agreements and social norms in impure public goods provision: Experimental evidence from farmers and foresters

Abstract

Agricultural and forestry production are inherently connected to the provision of impure public goods, yet public good provision generally remains below socially optimal levels. One promising approach to increase provision are social norms and non-binding collective agreements facilitated through cooperatives, although existing evidence on their effectiveness is mixed. We conducted a threshold public goods experiment with 141 farmers and foresters from Greece and Italy to examine the effectiveness of collective agreements and the relationship between social norms and cooperation. Our results show that non-binding collective agreements significantly increase individual contributions. We contribute to the literature by showing that not only average social norms, but also their distribution, are correlated with individual contributions, with greater heterogeneity within groups associated with lower contributions. Overall, focal points are shaped by expectations of peers’ contributions. Two key implications follow: cooperatives can effectively facilitate collective action, and managing heterogeneity among farmers and foresters is essential for sustaining cooperation.