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The Group Size Paradox Revisited

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  • PAUL PECORINO
  • AKRAM TEMIMI

Abstract

Esteban and Ray (2001) model an increasing marginal cost of effort in providing a public good. If the marginal cost of contribution function has an elasticity greater than 1, then the level of provision is increasing in group size, regardless of the degree of rivalry of the public good. We modify their model to a standard public goods setting, where their results continue to hold. We then add small fixed costs of participation to the model. If the good is sufficiently rival, one of Olson's (1965) central propositions is restored: public goods will fail to be provided in large groups. Copyright © 2008 Wiley Periodicals, Inc..

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  • Paul Pecorino & Akram Temimi, 2008. "The Group Size Paradox Revisited," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 785-799, October.
  • Handle: RePEc:bla:jpbect:v:10:y:2008:i:5:p:785-799
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    References listed on IDEAS

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    1. repec:cup:apsrev:v:95:y:2001:i:03:p:663-672_00 is not listed on IDEAS
    2. Pecorino, Paul, 1998. "Is There a Free-Rider Problem in Lobbying? Endogenous Tariffs, Trigger Strategies, and the Number of Firms," American Economic Review, American Economic Association, vol. 88(3), pages 652-660, June.
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    4. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    5. Pecorino, Paul, 1999. "The effect of group size on public good provision in a repeated game setting," Journal of Public Economics, Elsevier, vol. 72(1), pages 121-134, April.
    6. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    7. Huseyin Yildirim, 2006. "Getting the Ball Rolling: Voluntary Contributions to a Large-Scale Public Project," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(4), pages 503-528, October.
    8. Dixit, Avinash & Olson, Mancur, 2000. "Does voluntary participation undermine the Coase Theorem?," Journal of Public Economics, Elsevier, vol. 76(3), pages 309-335, June.
    9. Martin McGuire, 1974. "Group size, group homo-geneity, and the aggregate provision of a pure public good under cournot behavior," Public Choice, Springer, vol. 18(1), pages 107-126, June.
    10. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
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    Cited by:

    1. Paul Pecorino & Akram Temimi, 2007. "Public good provision in a repeated game: The role of small fixed costs of participation," Public Choice, Springer, vol. 130(3), pages 337-346, March.
    2. Paul Pecorino, 2015. "Olson’s Logic of Collective Action at fifty," Public Choice, Springer, vol. 162(3), pages 243-262, March.
    3. Martin Kolmar & Andreas Wagener, 2010. "Inefficient Group Organization as Optimal Adaption to Dominant Environments," CESifo Working Paper Series 3157, CESifo Group Munich.
    4. Arye Hillman & Ngo Van Long, 2017. "The social cost of contestable benefits," CIRANO Working Papers 2017s-11, CIRANO.
    5. Arye L. Hillman & Ngo Van Long, 2017. "Rent Seeking: The Social Cost of Contestable Benefits," CESifo Working Paper Series 6462, CESifo Group Munich.
    6. Paul Pecorino, 2009. "Public goods, group size, and the degree of rivalry," Public Choice, Springer, vol. 138(1), pages 161-169, January.
    7. Kaplan, Jonathan D. & Howitt, Richard E. & Kroll, Stephan, 2012. "Private Provision of a Stochastic Common Property Resource," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124855, Agricultural and Applied Economics Association.
    8. Martin Kolmar & Andreas Wagener, 2013. "Inefficiency As A Strategic Device In Group Contests Against Dominant Opponents," Economic Inquiry, Western Economic Association International, vol. 51(4), pages 2083-2095, October.
    9. Thierry Pénard & Sylvain Dejean & Raphaël Suire, 2011. "Olson’s Paradox Revisited: An Empirical Analysis of Incentives to Contribute in P2P File-sharing Communities," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201105, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    10. Pau Balart & Sabine Flamand & Orestis Troumpounis, 2014. "Strategic choice of sharing rules in collective contests," Working Papers 64402108, Lancaster University Management School, Economics Department.
    11. Martin Kolmar & Hendrik Rommeswinkel, 2011. "Technological Determinants of the Group-Size Paradox," CESifo Working Paper Series 3362, CESifo Group Munich.
    12. Todd Sandler, 2015. "Collective action: fifty years later," Public Choice, Springer, vol. 164(3), pages 195-216, September.
    13. Noriaki Matsushima & Ryusuke Shinohara, 2015. "The efficiency of monopolistic provision of public goods through simultaneous bilateral bargaining," ISER Discussion Paper 0948, Institute of Social and Economic Research, Osaka University.

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