The sovereignty of land and natural resources of Taiwan indigenous people have been seriously challenged by the expansion of state power and capitalistic market economy since 19th century. Consequently, many indigenous communities
have made efforts to adjust to and negotiate with modern institutions. This article analyses the logic of the lapse of indigenes’ land tenure, and examines two common pool resource (CPR) self-governing cases, which Atayal communities seek to manage by collective action for collective interest. Furthermore, drawing from neo-institutional economic perspective, this article discusses both how the internal institution affects the solidarity of communities and the derivation of Gaga, a traditional institution of Atayal tribe. In spite of the fact that the formal organization of Gaga no longer exists, its’ Meta rule leads to the formation of social constraints then affects the institutional choice. In the end, this article suggests that the reform of land tenure institution support CPR self-governing in indigenous areas, which will
diminish the conflicts emerging from the interaction between state power and capitalistic market economy.