How communication systems emerge and remain stable is an important question in both cognitive science and evolutionary biology. For communication to arise, not only must individuals cooperate by signaling reliable information, but they must also coordinate and perpetuate signals. Most studies on the emergence of communication in humans typically consider scenarios where individuals implicitly share the same interests. Likewise, most studies on human cooperation consider scenarios where shared conventions of signals and meanings cannot be developed de novo. Here, we combined both approaches with an economic experiment where participants could develop a common language, but under different conditions fostering or hindering cooperation. Participants endeavored to acquire a resource through a learning task in a computer-based environment. After this task, participants had the option to transmit a signal (a color) to a fellow group member, who would subsequently play the same learning task. We varied the way participants competed with each other (either global scale or local scale) and the cost of transmitting a signal (either costly or noncostly) and tracked the way in which signals were used as communication among players. Under global competition, players signaled more often and more consistently, scored higher individual payoffs, and established shared associations of signals and meanings. In addition, costly signals were also more likely to be used under global competition; whereas under local competition, fewer signals were sent and no effective communication system was developed. Our results demonstrate that communication involves both a coordination and a cooperative dilemma and show the importance of studying language evolution under different conditions influencing human cooperation.