Provision of Collective Goods As a Function of Group Size

Abstract

In The Logic of Collective Action, Mancur Olson shows how the activities of various political organizations can be fruitfully analyzed using the theory of collective goods. Several of Olson's major conclusions concern the relationship between the size of a group and its ability to provide its members with collective benefits. He concludes that as group size increases, the amount of collective benefits provided will become increasingly suboptimal, and that the absolute amount of collective benefits provided will decrease. This paper shows that Olson's conclusion concerning the relationship between group size and the absolute amount of collective benefits provided is not generally true. Within the framework of analysis used by Olson, it is demonstrated that the relationship is determined by the interaction between two effects, an “income” effect which may cause the level of benefits provided to increase as group size increases, and a “congestion” effect which may cause the level of benefits to decrease as group size increases. The final result is that for “inclusive” collective goods the relationship is an increasing one, while for “exclusive” goods it is a decreasing one. Some implications of this result for the use of the theory of collective goods in studying political processes are discussed.