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The Consequences of Collective Action: An Incomplete‐Contracts Approach

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  • Scott Gehlbach

Abstract

Public policy may be determined as much by what cannot be agreed to by politicians and organized interests as by what can. Focusing on the inability of organized groups to credibly promise that their members will fully report revenues to tax authorities, I develop an incomplete‐contracts lobbying model that shows that the provision of collective goods may be influenced by the anticipated tax compliance of economic sectors as well as by the organization of interests. Data from a survey of firms in Eastern Europe and the former Soviet Union are broadly supportive of the theory: the ability of firms to hide revenues from tax authorities rivals conventional collective‐action variables in explaining variation in collective‐goods provision, but only in that part of the postcommunist world where differences in revenue hiding across sectors are especially large.

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  • Scott Gehlbach, 2006. "The Consequences of Collective Action: An Incomplete‐Contracts Approach," American Journal of Political Science, John Wiley & Sons, vol. 50(3), pages 802-823, July.
    • Handle: RePEc:wly:amposc:v:50:y:2006:i:3:p:802-823
    DOI: 10.1111/j.1540-5907.2006.00217.x
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    2. Pyle, William, 2007. "Organized business, political regimes and property rights across the Russian Federation," BOFIT Discussion Papers 18/2007, Bank of Finland Institute for Emerging Economies (BOFIT).

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