Public Good Provision in Large Groups: Olson Was (Almost Always) Right!

U of Alabama Economics, Finance and Legal Studies Working Paper No. 07-09-08

16 Pages Posted: 26 Sep 2007

See all articles by Paul Pecorino

Paul Pecorino

University of Alabama - Department of Economics, Finance and Legal Studies

Date Written: September 2007

Abstract

It is well established that the provision of a pure public good is increasing in group size if the good is normal. What I show is that if the good exhibits even a small degree of rivalry, then the individual level of consumption of the public good falls to 0 in a large group. Thus, a strong version of the Olson hypothesis applies to anything other than an pure public good. Technically, what is important is the nature of the public good as the group size grows large. If the good approaches a pure public good in the limit, we will not obtain a strong version of the Olson hypothesis, but if the commodity exhibits any degree of rivalry in the limit, then we do obtain a strong version of his hypothesis.

Keywords: Public Goods, Group Size, Olson Hypothesis

JEL Classification: D7, H4, C72

Suggested Citation

Pecorino, Paul, Public Good Provision in Large Groups: Olson Was (Almost Always) Right! (September 2007). U of Alabama Economics, Finance and Legal Studies Working Paper No. 07-09-08, Available at SSRN: https://ssrn.com/abstract=1016772 or http://dx.doi.org/10.2139/ssrn.1016772

Paul Pecorino (Contact Author)

University of Alabama - Department of Economics, Finance and Legal Studies ( email )

P.O. Box 870244
Tuscaloosa, AL 35487
United States
205-348-0379 (Phone)
205-348-0590 (Fax)

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