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The economic theory of collective action is concerned with the provision of public goods (and other collective consumption) through the collaboration of two or more individuals, and the impact of externalities on group behavior. In economics, a public good is a good that is hard or even impossible to produce for private profit, because the market fails to account for its large beneficial externalities. ...
An externality occurs in economics when a decision (for example, to pollute the atmosphere) causes costs or benefits to stakeholders other than the person making the decision. ...
The foundational work in collective action was Mancur Olson's 1965 book The Logic of Collective Action: Public Goods and the Theory of Groups. Professor Mancur Olson (1932 - February 19, 1998) was a leading social scientist. ...
1965 was a common year starting on Friday (link goes to calendar). ...
The theory explores the market failures where individual consumer rationality and firms' profit-seeking do not lead to efficient provision of the public goods, i.e. where another level of provision would provide a higher utility at a lower cost. In economics, a market failure is a situation in which markets do not efficiently organize production or allocate goods and services to consumers. ...
Homo economicus, or Economic man, is a term used for an approximation or model of homo sapiens that acts to obtain the highest possible well-being for himself given available information about opportunities and other constraints, both natural and institutional, on his ability to achieve his predetermined goals. ...
The term inefficiency has several meanings depending on the context in which its used: Economic inefficiency refers to a situation where we could be doing a better job, i. ...
This article is about utility in economics and in game theory. ...
Note, however, that the theory is not necessarily a challenge to the invisible hand principle of Adam Smith. It only limits the domain in which that principle applies: for purely private goods in ideal competitive markets, the pursuit of self-interest is still efficient. The Invisible hand is a metaphor created by Adam Smith to illustrate the principle of enlightened self interest. Today this principle is associated with psychological egoism. ...
Adam Smith Adam Smith, LL.D. , FRS (Baptised June 5, 1723 – July 17, 1790) was a Scottish political economist and moral philosopher. ...
In economics Private good is an opposite of the public good. ...
The term neoliberalism was coined by Conservative Republicans to describe a political-economic philosophy that had major implications for government policies beginning in the 1970s – and increasingly prominent since 1980 – that de-emphasizes or rejects government intervention in the economy (that complements private initiative), focusing instead on achieving progress and...
Besides economics, the theory has found many applications in political science, sociology, anthropology and environmentalism. Niccolò Machiavelli, ca 1500, became the key figure in realistic political theory, crucial to political science Political science is an academic and research discipline that deals with the theory and practice of politics and the description and analysis of political systems and political behavior. ...
Social interactions of people and their consequences are the subject of sociology studies. ...
Anthropology (from the Greek word άνθÏωπος = human) consists of the study of humankind (see genus Homo). ...
Environmentalism is the support or involvement with the environmental movement by environmentalists. ...
Exploitation of the great by the small
Mancur Olson made the highly controversial claim that individual rational choice leads to situations where individuals with more resources, will carry a higher burden in the provision of the public good than poorer ones. Poorer individuals will usually have little choice but to opt for the free rider strategy, i.e. they will attempt to benefit from the public good without contributing to its provision. This also encourages the under-production (inefficient production) of the public good. Rational choice theory is a way of looking at deliberations between a number of potential courses of action, in which rationality of one form or another is used either to decide which course of action would be the best to take, or to predict which course of action actually will...
In the analyses of economics and political science, free riders are actors who take more than their fair share of the benefits or do not shoulder their fair share of the costs of their use of a resource, involvement in a project, etc. ...
However, further theoretical analysis showed that this is not the case when individuals have widely-differing perceptions of the utility of the public good. This article is about utility in economics and in game theory. ...
Institutional design While public goods are often provided by governments, this is not always the case. Various institutional designs have been studied with the aim of reducing the collaborative failure. The best design for a given situation depends on the production costs, the utility function, and the collaborative effects, amongst other things. Here are only some examples:
Joint products A joint-product model analyzes the collaborative effect of joining a private good to a public good. For example, a tax deduction (private good) can be tied to a donation to a charity (public good).
It can be shown that the provision of the public good increases when tied to the private good, provided that the private good is provided by a monopoly (otherwise the private good would be provided by competitors without the link to the public good).
Club Some institutional design, e.g. intellectual property rights, can introduce an exclusion mechanism and turn a pure public good into an impure public good artificially. In law, particularly in common law jurisdictions, intellectual property is a form of legal entitlement which allows its holder to control the use of certain intangible ideas and expressions. ...
In economics, a public good is a good that is hard or even impossible to produce for private profit, because the market fails to account for its large beneficial externalities. ...
If the costs of the exclusion mechanism are not higher than the gain from the collaboration, clubs can emerge. James M. Buchanan showed in his seminal paper that clubs can be an efficient alternative to government interventions. For the president of this name, see James Buchanan. ...
A nation can be seen as a club whose members are its citizens. Government would then be the manager of this club. This is further studied in the Theory of the State. For publications of this name, see also Nation (disambiguation) The most popular modern ethical and philosophical doctrines state that all humans are divided into groups called nations. ...
Federated structure In some cases, theory shows that collaboration emerges spontaneously in smaller groups rather than in large ones. This explains why labor unions or charities often have a federated structure.
Wikipedia is another example, where collaboration is fostered at the level of individual pages; this involves fewer participants than collaboration on the encyclopedia as a whole. Collaboration on wikibooks is more difficult for the same reason. Wikibooks, previously called Wikimedia Free Textbook Project and Wikimedia-Textbooks, is a sister project to Wikipedia and is part of the Wikimedia foundation, begun on July 10, 2003. ...
See also Will the two prisoners cooperate to minimise total loss of liberty or will one of them, trusting the other to cooperate, betray him so as to go free? The prisoners dilemma is a type of non-zero-sum game (game in the sense of Game Theory). ...
Pareto efficiency, or Pareto optimality, is a central concept in economics with broad applications in game theory, engineering and the social sciences. ...
In game theory, the Nash equilibrium (named after John Nash) is a kind of optimal strategy for games involving two or more players, where no player has anything to gain by changing only ones own strategy. ...
The tragedy of the commons is a metaphor used to illustrate the conflict between individual interests and the common good. ...
A Common Property Resource or Common Pool Resource (CPR) is produced by a sufficiently large resource system that makes it costly but not impossible to exclude potential beneficiaries. ...
The tragedy of the anticommons occurs when too many individuals have rights of exclusion (such as property rights) in a scarce resource. ...
References - Olson, Mancur (1971). The Logic of Collective Action. Harvard University Press. ISBN 0674537513
- Sandler Todd (1992) Collective action: Theory and applications. University of Michigan Press.
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