A collective goods model of pluralist political systems

September 13, 2017 | Autor: John Chamberlin | Categoria: Political Science, Public Choice, Applied Economics, Political System
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A collective goods model ofpluralist political systems John R. Chamberlin * In The Logic of Collective Action, Mancur Olson strongly criticized the work of the analytical pluralists, particularly with regard to the fairness of the outcomes in a pluralist political system.' The foundation of his criticism is his assertion, based on a Cournot model of group behavior, that large groups are unable to compete in the political marketplace P If this is the case, and if, to use Bentley's phrase, 'the balance of group pressures is the existing state of society,' then one can expect this balance to be badly skewed in favor of small, special interests and against large, general interests. Recent analyses using the same model have shown that Olson's assertion concerning the behavior of large groups is not in general true, and that contrary to his assertion, the relationship between group size and the amount of a public good provided is an increasing one. 3 In light of these results, it seems appropriate to re-examine in detail the properties of a model of a pluralist political system based on the theory of collective goods. This paper contains such an analysis of pluralist political systems, and assesses the asymmetries in outcomes which arise from a variety of sources. Among the sources of asymmetry are variation in group size, wealth, influence, intensity of preferences, and the degree of organized pursuit of group goals. TIle discussion below suggests that variation in system parameters greatly affects the properties of outcomes and that it is necessary to specify more carefully than is usually done the characteristics of a particular pluralist system before assessing the fairness of its outcomes, Unorganized and organized groups Olson characterizes the outcomes of a pluralist political process as follows: The smaller groups - the privileged and intermediate groups - can often defeat the larger groups - the latent groups - which are supposed to prevail in a democracy. The privileged and intermediate groups often triumph over the numerically superior forces in the latent or large groups because the former are generally organized and active while the latter are normally unorganized and inactive. 4 • Assistant Professor of Political Science and Assistant Research Scientist. The Institute of Public Policy Studies, The University of Michigan. The research support of the Institute of Public Policy Studies is gratefully acknowledged.

Public Choice 33 (1978) 97-113. All rights reserved. Copyright © 1978 Martinus Nilhoff Publishers bv, The Hague/Boston/London.

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~ Because he concluded (incorrectly) that larger groups are less able to provide collective goods through Coumot behavior than small groups, Olson equates active groups (those providing some positive amount of a collective good) with organized groups (those which through their formal structure are able to attract contributions from their members above the level which would result from Coumot behavior)." In light of the revision of the conclusions of Olson's model, this equation is incorrect, for groups can be active without being organized, and the degree of activity (level of provision of the collective good) has been shown to be an increasing function of group size, wealth, influence, and intensity of preference. In the discussion below. I will usc 'unorganized' to refer to groups characterized by Coumot behavior, that is, a group in which each member acts as ifhe/she must bear the entire marginal cost of any increase in the group's activities. I will use 'organized' to refer to groups in which the members share (to some degree) these marginal costs. I will analyze the behavior of two types of groups, unorganized groups and perfectly organized groups, those which provide an optimal amount of the collective good." AU other groups fall somewhere between these two polar cases. The basic model of group behavior In the pluralist model of politics, political outcomes are the result of the balance of competing group interests. The model to be analyzed below is a simplified model of this complicated process. It focuses on the struggle between two competing interest groups to influence the level of benefits provided by a particular piece of legislation, which it is assumed will be enacted in Some form. This focus ignores some important aspects of pluralist politics, such as activities aimed at influencing electoral outcomes, how the issue got on the legislative agenda in the first place, and whether or not the legislation will be enacted." The model retains, however, the central aspect of the pluralist model, that the outcome is determined by the balance of competing group interests, and I believe it can yield conclusions regarding outcomes which have relevance to group behavior in more complex settings. ( Consider a world with two goods, a private good y with unitary price, and a public good x. II Suppose there are two groups and that the members of a group have identical preferences and identical budgets, although there may be differences between groups. Suppose that x is viewed as a public 'good' by members of Group I (which has til members, each with a budget of wdand as a public 'bad' by members of Group 2 (which has n2 memo bers, each with a budget of W2), and that a piece of legislation has been introduced which will provide a level of Xo of this good. For the purposes of the analysis undertaken below, it will be assumed that the passage of the legislation is assured, but that the level of x provided by the legislation is subject to influence by the actions of the members of the two groups.

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Assume that members of Group I can bring about changes in the level of

x at a price of PI per unit of change, and that the price faced by group 2 is P2' The collective good being provided in the model is not x itself but political activity which results in a change in the level of x in the legislation. Thus different groups may face different prices for changes in the level of

x. 9 The price P at which members of a group can bring about changes in government policy is an abstraction which reflects a wide variety of political factors. One of these is the inherent worth of the group's appeal in the eyes of legislators, including the degree to which the appeal raises 'special' or 'general' interests. To the extent that large groups more often represent general interests, as Olson suggests, this factor will favor them. A second factor is the power of the group as an electoral force, which is importantly influenced by the other parameters of the group considered in the model (size, wealth, and intensity of preference). A group's ability to significantly effect the outcomes of legislative elections will make legislators more responsive to the group's demands (which will be reflected in the model in the form of a lower price for changing government policy). Groups which are able to convert a number oflegislators to their causes, for either or both of the above reasons, may face quite low prices as the legislators themselves become the prime movers for policy change.I? Most discussions of interest groups suggest that size is negatively related to wealth and intensity of preferences, but since the latter two are substitutes for size in the electoral arena, it is difficult to assess which groups are likely to benefit most from this activity. The model of group behavior will be developed for the first group (whose members view x as a 'good') and then extended to the case in which the two groups compete against one another to influence the level of x. Figure 1 shows the allocation problem facing the ith member of Group 1, where XI is the level of x which will result if Group 1 takes no action. The line from Eo through E 1 is a portion of the individual's income-consumption curve, and the line from Eo through E 2 is a portion of the individual's priceconsumption curve. The two budget lines correspond to prices of PI and PI In for changes in the level of x. As I have shown elsewhere, the equilibrium behavior associated with unorganized (Coumot) and organized (group rational) behavior correspond to outcomes E 1 and E 2 respectively.I! In Figure 1, if the value of 1 changes, the equilibrium behavior of Group 1 will change. The locus of the equilibria will give rise to two reaction curves for Group I, one for unorganized (Ru ) and one for organized behavior (Ro). These are shown in Figure 2, and indicate the change in x brought about by the activity of Group I if the status quo is XI .12 The reaction curves for Group 2 can be derived in a similar manner, except that x is treated as a 'bad' rather than as a 'good'. These curves are shown in Figure 3. For a given value of XI ,it is possible to combine Figures 2 and 3 and show the responses of the two groups to each other's activity,



~ -----------


Filun J. Unorganized and organized equilibria.

Fipu 2. Reaction curves for group 1.

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Figure 3. Reaction curves for group 2.




/ /

X /



/ / / /

-:--#'I~_ Ro2

!utI F~

4. Possible equilibria.

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~2 net of xo. Figure 4 shows this result. The four equilibria which result from the various combinations of behavior are labelled accordingly. Of particular interest are the equilibria Eu u and Eo o • the outcomes under unorganized and perfectly organized behavior. The resultant level of x in the enacted legislation is given in each case by x:::; Xo + /);xl - b.x 2 • Outcomes in an unorganized pluralist system In order to investigate the effects of various differences between groups upon the outcome of an unorganized pluralist process it is first necessary to determine the outcome of such a process when no differences exist between groups, so that this outcome may be used as a basis for comparison. The following parameters of the process are of particular interest:

1. group size (111. 112)' 2. the budgets (wealth) of the individuals Iw., W2),3. the influence of the groups; that is, the responsiveness of the political process to actions taken by the groups (as measured by the prices PI and P2),4. the intensity of preference of the individuals for the public good (as indicated by the shape of the indifference map),13 5. the status quo of the legislation, xo.

In Figure 5, the solid lines indicate the reaction curves (R~, R~) of two unorganized groups which are identical with regard to the first four parameters above except that Group I views x as a 'good' as Group 2 views x as a 'bad.'14 At the equilibrium (Eu u ) , there is no change from the status quo (x > Xo + /);xl - /);x2 :::; Xo since tsx, :::; /);x2).Thus, in an unorganized political system identical groups battle to a standoff, with no net change occurring in the level of the public good. 1S The other reaction curve in Figure 5 (labelled R~) is that which results if at least one of the following is true: l. 111 >112 2. WI >W2 3. PI xo; that is, the outcome is shifted in favor of the larger, wealthier, more influential and/or intense group. The direction of this shift is what one would presumably expect in a pluralist political system.!? If this is true, the equilibrium of an unorganized political process can be criticized only with regard to the magnitude of the shift, which might be greater or smaller than desired.

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Figure 5. Equilibrium of an unorganized pluralist process.


Figure 6. Unorganized equilibrium and group size.

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~4 There is an important difference in the magnitudes of the shifts associated with differences in group size on one hand and differences in group wealth, influence and/or intensity on the other. Figure 6 shows the equilibria for two groups, of size nl and n2, which are identical in all other respects. The equilibria result in only slightly different total investments, and the larger the smaller group is, the smaller will be the difference in total investments. The total investment for a group of size n approaches an asymptotic value of X s quite rapidly as n increases, so rapidly under normal conditions that the differences in total group investment become vanishingly small if both groups are of even moderate size. This fact suggests that in an unorganized pluralist system, differences in group size have only a vanishingly small effect upon political outcomes if the groups are at all largc}S An alternative interpretation of this result, which may occur to some readers, is that while it is true that large groups are slightly more powerful than small groups, the per capita power of the members of a group declines rapidly with increasing group size, and large groups are in this sense less powerful than small groups. Indeed, such an interpretation seems to be what Olson had in mind, for the 'fraction of the group gain' obtained by each individual plays a central role in his analysis. Such an interpretation seems to me to be fundamentally mistaken. Because the good in question is a pure public good, it is not shared in the sense that a private good would be shared. In terms of consumption, each individual's 'share' is equal to the total amount provided, and it is the total amount of the good not the individual's 'fraction of the group gain,' that is an argument in the individual's utility function. To assert that a large group is less powerful because its 'power per capita' is less would be akin (using the classic example of economists) to asserting that the members of a large fishing fleet from a town with a slightly more powerful lighthouse are less protected than the members of a smaller fleet from another town with a slightly less powerful lighthouse. To speak of a fisherman's per capita share of the light from the lighthouse is meaningless, and the same is true of the use of per capita shares of group power to assess the relative power of different groups. The effects of differences in wealth, influence, or intensity of preference may be quite different from those of differences in size. An increase in intensity or influence shifts the income consumption curve (and the resultant equilibrium) to the right, while an increase in wealth shifts the equilibrium to the right along the income consumption curve. IIi all cases, the amount of collective action by the group increases. The amount of lobbying activity provided as a function of these parameters does not possess the extreme asymptotic properties shown in Figure 6. This means that over large ranges of these parameters the amount of collective action continues to increase without approaching an asymptote, indicating that the outcomes in an unorganized pluralist system are much more sensitive

Volume 33 Issue 4 105 to variation in wealth, influence, and intensity than to variation in group size.J? The arguments presented above contradict the assertion, normally attributed to Olson, that the interests of large groups will be dominated by the interests of small groups in an unorganized pluralist system. It has been shown above that such a conclusion is not consistent with the Cournot model and that, ceteris paribus, large groups do (slightly) better than small groups in influencing the outcome. It remains a valid criticism of such a system that it is relatively insensitive to variations in group size, but this criticism, that large groups do not win by as large a margin as they should, is quite different from the assertion that large groups are destined to be certain losers. With slight modification, however, this assertion is valid, and in this modified form it expresses a common criticism of the pluralist model- that small, advantaged groups have greater power (effect upon outcomes) than do large, less advantaged groups.P? This is due to the fact that differences in size have less effect upon the pluralist outcome than differences in wealth, influence and intensity of preference. It is important to note, however, that this asymmetry is not due to the inability of large groups to provide a collective good in the form of political activity. The asymmetry arises because the larger size of one group is not sufficient to counterbalance the greater wealth, influence and/or intensity of the other, and is not due to the fact that the small group is organized while the large one is not. An important part of the normative foundation of the pluralist view of politics is the concept of the 'potential' interest group.U These are groups which are inactive at some particular point in time, but which nevertheless represent real mutual interests, and it is argued that if these interests are sufficiently threatened, the group may be transformed into an active interest group, a fact which gives these groups some power even in their potential state; in Truman's words: .•. The possibility that severe disturbances will be created if these submerged, potential interests should organize [become active) necessitates some recognition of the existence of these interests and give them at least a minimum of influence. 22

Olson is strong in his criticism of the potential interest group, arguing that its inability to provide collective benefits nullifies its influence. Olson's contention that large groups cannot become politically active is false. Ceteris paribus, large groups do (slightly) better than small groups in generating collective goods such as political activity. Far from sounding the death knoll for potential groups, the theory of collective action put forward by Olson turns out to be entirely consistent with the notion of a potential group. A potential or latent group is one which currently chooses to invest no resources in political activity. Should the circumstances of the members

C!;1b1ic choice ~6 change, they might well behave differently. In particular, should they feel their interest to be increasingly threatened (by, say, a change in xo), or should their intensity of preference for the public good increase,the potential group may become active. In light of the expanded version of Olson's model presented here, Olson's classification of groups as privileged, intermediate and latent, and the use of these terms as synonymous with small, medium and large, is incorrect. A more appropriate set of categories would be privileged and latent, or active and potential, with the important point being that group size is not (on the basis of Olson's model) a determinant of the category into which a particular group falls. Alternative pluralist systems The principal failing of the unorganized pluralist system modeled above is that group size is not sufficiently taken into account in the process of arriving at an equilibrium, with the result that small, advantaged groups have greater effects on outcomes than do larger, less advantaged groups (which are alleged to represent more 'general' interestsj.Tt seems natural to ask whether some alternative pluralist system, characterized by a greater degree of cooperation among the members of all groups, might not yield outcomes which are superior to the outcomes of an unorganized pluralist system. An obvious alternative system is that characterized by perfectly cooperative group action. In addition to the fact that an organized system is the polar opposite of an unorganized system, a primary reason for according special consideration to this alternative is that perfectly cooperative group behavior is usually taken as the norm toward which groups should strive.2 3 A comparison of the properties of the equilibria of the two systems will thus provide insight into the value of increased cooperation among group members. Figure 5 showed the outcomes of an unorganized pluralist system in the cases of equal and unequal groups. A similar figure could be drawn for an organized pluralist system, and the results would be the same as in the former case: in an organized pluralist system, the outcome shifts from the status quo in the direction favored by the larger, wealthier, more influential, and/or more intense group. The entire range of pluralist systems thus exhibits the same general properties, and distinctions between them can be drawn only from a more detailed investigation of the sensitivity of various systems to variation in important political variables. As Olson demonstrated, the degree of suboptimality associated with unorganized behavior increases with group size.24 This fact suggests the possibility that an increase in the level of cooperation in group behavior might result in an outcome more favorable to the larger group, thus correcting for some of the 'bias' inherent in unorganized systems. This reasoning might also be applied to the other parameters of a group, thus allowing a

Volume 33 Issue 4 107 comparison of the properties of outcomes of unorganized and organized pluralist systems based upon the degree of suboptimality associated with unorganized group behavior. Such a comparison-Jails for two reasons: (1) it is impossible to reach general conclusions regarding the relationships between the degree of suboptimality and group wealth, influence and intensity of preference, and (2) even if this were not the case, it is not always true that the outcome in an organized system is more favorable to the group whose unorganized behavior exhibits the greater degree of suboptimallty.P If sufficiently strong restrictions are placed on the individuals' indifference maps, it is possible to examine situations in which the above problems do not arise. For instance, if individuals' preferences are given by CobbsDouglas utility functions, and certain assumptions are made about the parameters of these utility functions, then it can be shown that the degree of suboptimality associated with unorganized behavior is an increasing function of group size, wealth, influence, and intensity of preference.V In this case, if the two groups involved are equal except for size, the organized equilibrium is more favorable to the larger group than is the unorganized equilibrium. Thus in this case increased cooperation does alleviate some of the 'bias' against large groups, which is presumably desirable, but a considerable price is paid for this improvement. For in addition to being more favorable to large groups, outcomes in the organized system also favor the wealthy. and/or the influential more than do the outcomes of the unorganized system, a fact which seems sufficient for us to reject the notion that the outcome of an organized pluralist system is unambiguously superior to the outcome of an unorganized system. While the outcomes in the two systems which have been discussed share certain qualitative simiIarities, there are many important differences, and it is difficult to reach general nonnative conclusions about the properties of outcomes in different pluralist systems. Since unorganized and organized systems represent the extremes among pluralist systems, comparisons involving systems with some intermediate degree of cooperation would run into the same difficulties and indeterminacies encountered above. I turn next to a system in which the degree of organization is different in the two groups. Mixed pluralist systems Olson's characterization of the outcomes of pluralist systems that was cited earlier suggests that the asymmetry in the outcomes is due to varying degrees of organization among organizations. Variation in this parameter can 'cause greater asymmetries in outcomes than variation in any other parameter. The degree of suboptimality associated with Coumot behavior relative to group rational behavior is severe for groups of even moderate size, and the ability of one group to achieve a greater degree of organization (cooperative cost sharing) than its opponent will generally result in a large

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~8 shift in the outcome in favor of the more organized group. In this way the 'bias' in favor of small, advantaged groups over large, disadvantaged groups that was shown to result from unorganized group behavior can be greatly magnified if in addition the small group can achieve a greater degree of cooperation among its members. Outcomes of this type correspond to one of the off-diagonal equilibria (E u o or E ou ) in Figure 4. It seems to me that this type of system is the image of pluralist politics that is portrayed by most critics of pluralist politics, including Olson. This model is not complete, however, unless it contains within it a model of the process by which groups organize that allows one to predict which groups will successfully organize and which will not. Olson offers some comments on the difficulties which groups face in organizing, and argues that there are greater barriers for large groups than small groups, but his arguments fall far short of being a rigorous model of this process.I? The role of the political entrepreneur, economies of scale in formal organizations, and the appropriateness of Olson's by-product strategy to groups of different sizes are only a few of the issues whose impact on the process of organizing a group must be reckoned with. Until these and other issues are resolved, it is premature to argue, on the basis of a collective goods model, that outcomes of pluralist political systems must possess the properties to the extent that Olson has claimed. While these properties are generally present in the outcomes of all pluralist systems, the degree to which they are present varies considerably, and therefore one should exercise caution in making sweeping generalizations about such outcomes. Efficiency in pluralist political systems A previous section considered the shift in the political outcome which would result if groups engaged in perfectly organized rather than unorganized behavior. It is important to distinguish between the shift favoring a given group and that group preferring the organized equilibrium to the unorganized equilibrium. The shift in outcome results from increased expenditures on political activity, and the question of whether the benefits are worth the costs has not yet been addressed. As will become clear, an unorganized political process may be most efficient from the viewpoint of all participants. The efficiency with which any social process operates is a characteristic of considerable interest, and at first glance it would appear that any pluralist political process is quite inefficient. This fact is most evident for the case of identical groups which oppose one another. In this case, as shown in Figure 5, no net change in the level of x takes place despite the fact that both groups- have invested resources in lobbying to change the level. The fact that the effects of the resources invested in lobbying by the two groups cancel each other gives rise to the inefficiency in the process, for if both groups could have agreed before hand to refrain from lobbying, and both had held

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to the agreement, everyone would have been better off. The legislation would have passed with the same level of benefits as when lobbying occurred, and each individual would have consumed more of the private good. The outcome which results from lobbying is thus not Pareto optimal since an alternative outcome exists at which all individuals are better off. 28 The argument that a pluralist system is by nature inefficient is not as conclusive as it may appear, however. The outcome from such a system is inefficient only if there exists a means of getting to an outcome that is unanimously preferred to it. Since the pluralist outcome is not known beforehand, but emerges from the political process only after the groups have invested resources in lobbying, it is difficult to reach agreement beforehand on the nature of an outcome which is unanimously preferred to the pluralist outcome by all individuals. In a very real sense, the cancelling out of the political efforts of the two groups is a necessary part of the process through which society elicits the preferences of concerned individuals. The fact that hindsight will always show that there existed more efficient ways of reaching the same outcome is of less relevance if these more efficient ways cannot be adduced in advance. The notion of efficiency has some relevance, however, to the task of comparing alternative pluralist systems. For there will always be a greater amount of resources wasted (i.e. efforts which cancel each other out) if groups achieve some degree of cooperation rather than engaging in unorganized behavior. In many instances, including the case of identical groups, the groups find themselves in a situation analogous to the prisoner's dilemma. This is shown in Table I, which indicates the equilibria shown in Figure 4 which result from combinations of organized and unorganized behavior by the two groups. If the groups are relatively evenly matched in terms of size, wealth, influence, and intensity of preference, these equilibria will have associated with the utility levels that correspond to those in the prisoner's dilemma. That is, each group would prefer to act in an organized manner no matter that the other group does not, but both.prefer the equilibrium resulting from unorganized behavior to the equilibrium resulting from organized behavior, because the additional resources invested in lobbying by both groups have only a minor effect on the fmal level of x, It thus appears that pluralist systems must choose between being suboptimal at one of two levels. Group rational behavior within groups yields suboptimal outcomes at the system level, while suboptimal behavior within groups yields Pareto optimal behavior at the system level. Participants in a pluralist system are thus faced with prisoners' dilemma games at both levels, and must choose to succumb to the dilemma at one level or the other. It would seem that the only truly optimal behavior in such circumstances is to agree, if possible, to restrict within group behavior to the unorganized variety.I? A similar argument exists with regard to changes in legislative responses to group demands. It might be thought that across-the-board increases in

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~O Table 1.

The four possible equilibria. Group 2 Unorganized Unorganized

Eu u

Organized Eu o

Group 1 Organized

responsiveness would be beneficial in a system in which outcomes are . formed in response to group behavior, but this is not necessarily the case. If increased responsiveness (lower prices for changes in the level of x) results in a greater allocation of resources to political activity due to an elastic demand for the collective good x, the effect can be the same as that which results from an increase in the degree of organization, namely a decrease in the efficiency of the process. On the other hand, if demand for x is price inelastic, an increase in responsiveness may increase the efficiency of the pluralist system. Summary This paper has presented a simplified model of a pluralist political system based upon the theory of collective action developed by Mancur Olson. Using Olson's model, it has been shown that outcomes of unorganized pluralist systems favor large, wealthy, influential, and/or intense groups, but that variations in group size have much smaller effects on outcomes than variations in the other parameters. This disparity gives rise to the fact that small, advantaged groups generally.have greater effects on outcomes than larger, less advantaged groups. It has also been argued that the notion of a potential group is entirely consistent with the model developed by Olson. It has also been shown that the biases associated with unorganized group behavior are not substantially avoided if group behavior is characterized by a greater degree of cooperation. Increased cooperation generally shifts outcomes in favor of larger groups, which seems desirable, but it also shifts outcomes in favor of wealthy and influential groups as well, the desirability of which is certainly questionable. In addition, the fact that it has been shown that greater cooperation within groups may result in a less efficient political process makes it even more difficult to argue that a pluralist process involving increased cooperation would be an improvement over an unorganized process. While proponents of pluralist political systems no doubt hold to a view in which groups are similar in the degree of cooperation among group members, critics of these systems often argue that differences in the degree of cooperation are pervasive. If this is true, it has been shown that the biases

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already inherent in a process characterized by an equal degree of cooperation may be magnified greatly until the balance of group behavior which determines the pluralist outcome bears little resemblance to the balance of the true group interests. Notes 1. See Olson (1965), ch. 5. His criticism focuses on the work of three principal theorists, Arthur F. Bentley (1908), David B. Truman (1951), and Earl Latham (1952). 2. For instance, see Olson, pp. 36,44.

3. See Chamberlin (1974) and McGuire (1974).

4. Olson, p. 128.

5. Olson, pp, 4648.

6. Behavior of perfectly cooperative groups will be analyzed using the Lindahl equilibrium. With respect to 'optimal' behavior, there exists a terminology problem which may complicate the discussion to foUow. The discussion will at some times concern itself with what is optimal for the members of a given group and at other times with what is optimal for the entire set of individuals in two groups, arguing on one place that what is optimal from one of these points of view is not optimal from the other. I will use Pareto optimal to refer to situations involving the entire set of individuals and group rational to refer to actions that are optimal for a given group. 7. This formulation could also be used to model attempts by groups to influence the decisions of regulatory agencies or other bureaucracies.

8. The development of the model is taken from Chamberlin (1976). It is assumed that x is a pure public good ('inclusive' in Olson's terminology) and that both goods are normal goods.

9. In this model price is a proxy for the influence (power) of a given group. To say that one group faces a lower price for (changes in) the public good than another is to say that, for a given investment of private resources, the first group can bring about a greater change in the level of the public good. Thus price varies inversely with the degree of influence of a group.

10. The role of the political entrepreneur in this process is particularly important, and has been discussed by Richard Wagner (1966) and Norman Frolich, Joe Oppenheimer and Oran Young (1971). 11. Chamberlin (1976). 12. Figure 2 is not drawn to scale. In particular, the distance between the curves R u and R o is much smaller than it would actually be. Unless demand for the collective is extremely price inelastic, the amount of the collective good provided through Cournot behavior will usually be only a small fraction of the optimal amount. This difference is understated in the figures for ease of presentation.

L1;1b1ic choice ~2 13. These four parameters correspond closely to the three characteristics listed by Bentley (pp. 215-216) as important determinants of the effectiveness of a group - number (1), intensity of preference (2,4) and technique (3).

14. The reaction curves are drawn as mirror images about the 45° line. Proponents of pluralist systems argue that the balance of group behavior reflects the balance of group interests, and this seems to me to embody the notion that the groups have identical interests at stake. 15. The 'waste' resulting from investments in political activity which cancel each other will be discussed further below. 16. That the reaction curve shifts to the right in each of these cases can be seen by exarnining the effects of increases in group size, budget and intensity of preference and a decrease in price on the unorganized outcome in Figure 1.

17. I say 'expect' despite the fact that Olson reached the opposite conclusion with respect to the effect of group size. The conclusions regarding large and intense groups seem in addition to be quite desirable. The desirability of the conclusions regarding wealth and influence may seem more questionable, but they nevertheless seem unavoidable in a system based on voluntary individual choice. 18. The discussion thus far has considered only groups made up of individuals. It is possible to apply this model to federations of interest groups with common goals so long as one is wilting to treat these groups as unitary actors. In this case, group sizes would be quite small and the above comments less applicable.

19. This also means that the degree of suboptimality associated with unorganized behavior does not increase as precipitously as these parameters increase in value. As I have shown elsewhere it need not even be the case that the degree of suboptirnality be an increasing function of these parameters. See Chamberlin (I976).

20. The term 'disadvantaged' is used here not in the sociological sense in which it is usually encountered, but in a technical sense to characterize a group which, relative to the group it opposes, possesses fewer of the resources (other than size) which positively affect the amount of political activity that is generated (in this instance, wealth, influence, and intensity of preference).' 21. Truman, pp. 508-516. 22. Truman, pp. 5 11·5 12.

23. For instance, Olson uses group rational behavior as the standard for determining the degree of suboptirnality associated with unorganized behavior. 24. Olson, p. 28. See also Chamberlin (1976). 25. The former point is discussed in Chamberlin (1976). Concerning the latter point, it is possible to draw versions of figure 5 in which a shift from unorganized to organized behavior shifts the outcome in favor of either group.

26. See Chamberlin (I976). These utility functions arc characterized by straight line income-consumption curves through the origin and horizontal price-consumption curves.

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27. Olson, pp. 4448.


In general, suppose the outcome is x = x o + lu. + lU:2 > X o and that Sx , > 0 and lu 1 > O. Then for lu~ =(lu. - lu 1 ) and lu; =O,x =X o + tu~ .: tu; =x. The level of x is unchanged, but the lower levels of investment in lobbying activity leave members of both groups with more of the private good. Thus the latter outcome is unanimouslypreferred to the former outcome. The 'waste' inherent in the allocation of resources to bargaining has been discussed previously by Gordon Tullock (1971).

29. In one sense it is possible to argue that the fact that an unorganized pluralist system is more efficient than any other is sufficient for it to be regarded as the 'optimal' pluralist system. If the prices in the model and the value of X o could be manipulated by changes in the 'rules of the game,' an unorganized system could be structured so that the outcomes possessed whatever properties one desired, and the system would have the added advantage of being the most efficient pluralist system. It is also possible that the amount of resources invested in lobbying in an unorganized system, though smaller than in any other pluralist system, will nevertheless result in a net welfare loss to society. Tullock (1971) pays particular attention to this case and shows that the choice between an unorganized pluralist system and no system at all may also be a prisoners' dilemma game, in which no system at all is the Pareto optimal outcome.

References Bentley, A.F. The Process of Government. Chicago, University of Chicago Press, 1908. Chamberlin, J .R. 'Provision of Collective Goods as a Function of Group Size.' American Political Science Review 48, 1974, pp. 707-716. Chamberlin, J.R. 'A Diagrammatic Exposition of the Logic of Collective Action.' Public Choice 26, 1976, pp. 59-74. Frolich, N., J. Oppenheimer and O. Young. Political Leadership and Collective Goods. Princeton University Press, Princeton, 1971. Latham, E. The Group Bases ofPolitics. Ithaca, N.Y., Cornell University Press, 1952. McGuire, M. 'Group Size, Group Homogeneity, and the Aggregate Provision of a Pure Public Good under Cournot Behavior.' Public Choice 18, 1974, pp. 107-126. Olson, M. The Logic of Collective Action. Cambridge,Harvard University Press, 1965. Truman, D.n. The Governmental Process. New York, Alfred E. Knopf, 1951. Tullock, G. 'The Cost of Transfers.' Kyklos 24, 1971, pp. 629-643. Wagner, R. 'Pressure Groups and Political Entrepreneurs: A Review Article.' Papers on Non-Market Decision Making I, 1966, pp. 161-170.

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