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A Theory of Association

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  • Basu, Kaushik

Abstract

The utility from some 'commodities' depends on the allocation rule used to distribute it. If, for example, a prize for excellence in some field is given frequently to the highest bidders, its recipients would feel less happy than they would otherwise. Such goods are called association goods. It is argued that a wide range of commodities have an element of the association good in them and that for such commodities standard theory end prescriptions run into difficulty. For instance, the prescription: "turn the good over to the price mechanism", may not be a good one because the value of the good may be diminished purely by virtue of resorting to the price mechanism to allocate it. This paper examines a variety of association goods, especially club memberships, jobs and school admissions.

Suggested Citation

  • Basu, Kaushik, "undated". "A Theory of Association," WIDER Working Papers 295528, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:ags:widerw:295528
    DOI: 10.22004/ag.econ.295528
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    References listed on IDEAS

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    1. Basu, Kaushik & Jones, Eric & Schlicht, Ekkehart, 1987. "The growth and decay of custom: The role of the new institutional economics in economic history," Explorations in Economic History, Elsevier, vol. 24(1), pages 1-21, January.
    2. Hirschman, Albert O., 1985. "Against Parsimony: Three Easy Ways of Complicating some Categories of Economic Discourse," Economics and Philosophy, Cambridge University Press, vol. 1(1), pages 7-21, April.
    3. H. Leibenstein, 1950. "Bandwagon, Snob, and Veblen Effects in the Theory of Consumers' Demand," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 64(2), pages 183-207.
    4. Sandler, Todd & Tschirhart, John T, 1980. "The Economic Theory of Clubs: An Evaluative Survey," Journal of Economic Literature, American Economic Association, vol. 18(4), pages 1481-1521, December.
    5. George Akerlof, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 599-617.
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