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Collective Action and the Group Size Paradox

In: 40 Years of Research on Rent Seeking 1

Author

Listed:
  • Joan Esteban

    (Campus de la UAB)

  • Debraj Ray

    (New York University)

Abstract
According to the Olson paradox, larger groups may be less successful than smaller groups in furthering their interests. We address the issue in a model with three distinctive features: explicit intergroup interaction, collective prizes with a varying mix of public and private characteristics, and nonlinear lobbying costs. The interplay of these features leads to new results. When the cost of lobbying has the elasticity of a quadratic function, or higher, larger groups are more effective no matter how private the prize. With smaller elasticities, a threshold degree of publicness is enough to overturn the Olson argument, and this threshold tends to zero as the elasticity approaches the value for a quadratic function. We also demonstrate that these results are true, irrespective of whether we examine group sizes over the cross-section in some given equilibrium or changes in the size of a given group over different equilibria.

Suggested Citation

  • Joan Esteban & Debraj Ray, 2008. "Collective Action and the Group Size Paradox," Springer Books, in: Roger D. Congleton & Arye L. Hillman & Kai A. Konrad (ed.), 40 Years of Research on Rent Seeking 1, pages 379-388, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-79182-9_25
    DOI: 10.1007/978-3-540-79182-9_25
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    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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