A collective goods model ofpluralistpolitical systems

John R. Chamberlin*In The Logic of Collective Action, Mancur Olson strongly criticized thework of the analytical pluralists, particularly with regard to the fairness ofthe outcomes in a pluralist political system.' The foundation of his criti­cism is his assertion, based on a Cournot model of group behavior, thatlarge groups are unable to compete in the political marketplace P If this isthe case, and if, to use Bentley's phrase, 'the balance of group pressures isthe existing state of society,' then one can expect this balance to be badlyskewed in favor of small, special interests and against large, general interests.Recent analyses using the same model have shown that Olson's assertionconcerning the behavior of large groups is not in general true, and thatcontrary to his assertion, the relationship between group size and theamount of a public good provided is an increasing one.3 In light of theseresults, it seems appropriate to re-examine in detail the properties of amodel of a pluralist political system based on the theory of collective goods.

This paper contains such an analysis of pluralist political systems, andassesses 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 groupgoals. TIle discussion below suggests that variation in system parametersgreatly affects the properties of outcomes and that it is necessary to specifymore carefully than is usually done the characteristics of a particular plural­ist system before assessing the fairness of its outcomes,

Unorganized and organized groupsOlson characterizes the outcomes of a pluralist political process as follows:

The smaller groups - the privileged and intermediate groups - can often defeat thelarger groups - the latent groups - which are supposed to prevail in a democracy.The privileged and intermediate groups often triumph over the numerically superiorforces in the latent or large groups because the former are generally organized andactive 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 theInstitute 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 toprovide collective goods through Coumot behavior than small groups, Olsonequates active groups (those providing some positive amount of a collectivegood) with organized groups (those which through their formal structure areable to attract contributions from their members above the level whichwould result from Coumot behavior)." In light of the revision of the con­clusions of Olson's model, this equation is incorrect, for groups can beactive without being organized, and the degree of activity (level of provisionof the collective good) has been shown to be an increasing function ofgroup size, wealth, influence, and intensity of preference. In the discussionbelow. I will usc 'unorganized' to refer to groups characterized by Coumotbehavior, that is, a group in which each member acts as ifhe/she must bearthe 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 anoptimal amount of the collective good." AU other groups fall somewherebetween these two polar cases.

The basic model of group behaviorIn the pluralist model of politics, political outcomes are the result of thebalance of competing group interests. The model to be analyzed below is asimplified model of this complicated process. It focuses on the strugglebetween two competing interest groups to influence the level of benefitsprovided by a particular piece of legislation, which it is assumed will beenacted in Some form. This focus ignores some important aspects ofpluralist politics, such as activities aimed at influencing electoral outcomes,how the issue got on the legislative agenda in the first place, and whetheror not the legislation will be enacted." The model retains, however, thecentral aspect of the pluralist model, that the outcome is determined bythe balance of competing group interests, and I believe it can yield conclu­sions regarding outcomes which have relevance to group behavior inmore 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 membersof a group have identical preferences and identical budgets, although theremay 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 budgetof wdand as a public 'bad' by members of Group 2 (which has n2 memobers, each with a budget of W2), and that a piece of legislation has beenintroduced which will provide a level of Xo of this good. For the purposesof the analysis undertaken below, it will be assumed that the passage of thelegislation is assured, but that the level of x provided by the legislation issubject 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 ofx at a price of PI per unit of change, and that the price faced by group 2 isP2' The collective good being provided in the model is not x itself butpolitical activity which results in a change in the level ofx in the legislation.Thus different groups may face different prices for changes in the level ofx.9 The price P at which members of a group can bring about changes ingovernment policy is an abstraction which reflects a wide variety of politicalfactors. One of these is the inherent worth of the group's appeal in the eyesof legislators, including the degree to which the appeal raises 'special' or'general' interests. To the extent that large groups more often representgeneral interests, as Olson suggests, this factor will favor them. A secondfactor is the power of the group as an electoral force, which is importantlyinfluenced by the other parameters of the group considered in the model(size, wealth, and intensity of preference). A group's ability to significantlyeffect the outcomes of legislative elections will make legislators moreresponsive to the group's demands (which will be reflected in the model inthe form of a lower price for changing government policy). Groups whichare able to convert a number oflegislators to their causes, for either or bothof the above reasons, may face quite low prices as the legislators themselvesbecome the prime movers for policy change.I? Most discussions of interestgroups suggest that size is negatively related to wealth and intensity ofpreferences, but since the latter two are substitutes for size in the electoralarena, it is difficult to assess which groups are likely to benefit most fromthis activity.

The model of group behavior will be developed for the first group (whosemembers view x as a 'good') and then extended to the case in which the twogroups compete against one another to influence the level of x. Figure 1shows the allocation problem facing the ith member of Group 1, where XIis the level of x which will result if Group 1 takes no action. The line fromEo through E1 is a portion of the individual's income-consumption curve,and the line from Eo through E2 is a portion of the individual's price­consumption curve. The two budget lines correspond to prices of PI andPI In for changes in the level of x. As I have shown elsewhere, the equili­brium behavior associated with unorganized (Coumot) and organized (grouprational) behavior correspond to outcomes E 1 and E2 respectively.I! InFigure 1, if the value of x1 changes, the equilibrium behavior of Group 1will change. The locus of the equilibria will give rise to two reaction curvesfor 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 bythe 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 areshown in Figure 3. For a given value ofXI ,it is possible to combine Figures2 and 3 and show the responses of the two groups to each other's activity,

~blicchoice

~

-----------

x

Filun J. Unorganized and organized equilibria.

Fipu 2. Reaction curves for group 1.

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Figure 3. Reaction curves for group 2.

Ro

F~ 4. Possible equilibria.

xo

"Xuu/ X

/ / 00

/ //

//

-:--#'I~_ R2o

!utI

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net of xo. Figure 4 shows this result. The four equilibria which result fromthe various combinations of behavior are labelled accordingly. Of particularinterest are the equilibria Eu u and Eo o • the outcomes under unorganizedand perfectly organized behavior. The resultant level of x in the enactedlegislation is given in each case by x:::; Xo + /);xl - b.x2 •

Outcomes in an unorganized pluralist systemIn order to investigate the effects of various differences between groupsupon the outcome of an unorganized pluralist process it is first necessaryto determine the outcome of such a process when no differences existbetween 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 andP2),-

4. the intensity of preference of the individuals for the public good (asindicated 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 twounorganized 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 xas a 'bad.'14 At the equilibrium (Eu u ) , there is no change from the statusquo (x > Xo + /);xl - /);x2 :::; Xo since tsx, :::; /);x2).Thus, in an unorganizedpolitical system identical groups battle to a standoff, with no net changeoccurring in the level of the public good. 1S

The other reaction curve in Figure 5 (labelled R~) is that which results ifat least one of the following is true:

l. 111 >112

2. WI >W23. PI <P24. the members of Group I place a higher value on x than do the members

of Group 2.16

In this case, the equilibrium (Eu u ) results in x » Xo + tsx, ....:. /);x2 >xo; thatis, the outcome is shifted in favor of the larger, wealthier, more influentialand/or intense group. The direction of this shift is what one would presum­ably expect in a pluralist political system.!? If this is true, the equilibriumof an unorganized political process can be criticized only with regard to themagnitude of the shift, which might be greater or smaller than desired.

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Figure 5. Equilibrium of an unorganized pluralist process.

Figure6. Unorganized equilibrium and group size.

x

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There is an important difference in the magnitudes of the shifts asso­ciated with differences in group size on one hand and differences in groupwealth, 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 otherrespects. The equilibria result in only slightly different total investments,and the larger the smaller group is, the smaller will be the difference in totalinvestments. The total investment for a group of size n approaches anasymptotic value of X s quite rapidly as n increases, so rapidly under normalconditions that the differences in total group investment become vanish­ingly small if both groups are of even moderate size. This fact suggests thatin an unorganized pluralist system, differences in group size have only avanishingly small effect upon political outcomes if the groups are at alllargc}S

An alternative interpretation of this result, which may occur to somereaders, is that while it is true that large groups are slightly more powerfulthan small groups, the per capita power of the members of a group declinesrapidly with increasing group size, and large groups are in this sense lesspowerful than small groups. Indeed, such an interpretation seems to be whatOlson had in mind, for the 'fraction of the group gain' obtained by eachindividual plays a central role in his analysis. Such an interpretation seemsto me to be fundamentally mistaken. Because the good in question is a purepublic good, it is not shared in the sense that a private good would beshared. In terms of consumption, each individual's 'share' is equal to thetotal amount provided, and it is the total amount of the good not theindividual'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 becauseits 'power per capita' is less would be akin (using the classic example ofeconomists) to asserting that the members of a large fishing fleet from atown with a slightly more powerful lighthouse are less protected than themembers of a smaller fleet from another town with a slightly less powerfullighthouse. To speak of a fisherman's per capita share of the light from thelighthouse is meaningless, and the same is true of the use of per capitashares of group power to assess the relative power of different groups.

The effects of differences in wealth, influence, or intensity ofpreference may be quite different from those of differences in size. Anincrease in intensity or influence shifts the income consumption curve (andthe resultant equilibrium) to the right, while an increase in wealth shifts theequilibrium to the right along the income consumption curve. IIi all cases,the amount of collective action by the group increases. The amount oflobbying activity provided as a function of these parameters does notpossess the extreme asymptotic properties shown in Figure 6. This meansthat over large ranges of these parameters the amount of collective actioncontinues to increase without approaching an asymptote, indicating thatthe outcomes in an unorganized pluralist system are much more sensitive

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to variation in wealth, influence, and intensity than to variation in groupsize.J?

The arguments presented above contradict the assertion, normally attri­buted to Olson, that the interests of large groups will be dominated by theinterests of small groups in an unorganized pluralist system. It has beenshown above that such a conclusion is not consistent with the Cournotmodel and that, ceteris paribus, large groups do (slightly) better than smallgroups in influencing the outcome. It remains a valid criticism of such asystem that it is relatively insensitive to variations in group size, but thiscriticism, that large groups do not win by as large a margin as they should, isquite different from the assertion that large groups are destined to becertain losers.

With slight modification, however, this assertion is valid, and in thismodified form it expresses a common criticism of the pluralist model- thatsmall, advantaged groups have greater power (effect upon outcomes) thando large, less advantagedgroups.P? This is due to the fact that differences insize have less effect upon the pluralist outcome than differences in wealth,influence and intensity of preference. It is important to note, however, thatthis asymmetry is not due to the inability of large groups to provide acollective good in the form of political activity. The asymmetry arisesbecause the larger size of one group is not sufficient to counterbalance thegreater wealth, influence and/or intensity of the other, and is not due tothe fact that the smallgroup is organizedwhile the large one is not.

An important part of the normative foundation of the pluralist view ofpolitics is the concept of the 'potential' interest group.U These are groupswhich are inactive at some particular point in time, but which neverthelessrepresent real mutual interests, and it is argued that if these interests aresufficiently threatened, the group may be transformed into an activeinterest group, a fact which gives these groups some power even in theirpotential 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 theexistence 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 thatits inability to provide collective benefits nullifies its influence.

Olson's contention that large groups cannot become politically active isfalse. Ceteris paribus, large groups do (slightly) better than small groups ingenerating collective goods such as political activity. Far from sounding thedeath knoll for potential groups, the theory ofcollective action put forwardby Olson turns out to be entirely consistent with the notion of a potentialgroup. A potential or latent group is one which currently chooses to investno resources in political activity. Should the circumstances of the members

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~6

change, they might well behave differently. In particular, should they feeltheir interest to be increasingly threatened (by, say, a change in xo), orshould 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'sclassification of groups as privileged, intermediate and latent, and the use ofthese terms as synonymous with small, medium and large, is incorrect. Amore appropriate set of categories would be privileged and latent, or activeand potential, with the important point being that group size is not (on thebasis of Olson's model) a determinant of the category into which a particu­lar group falls.

Alternative pluralist systemsThe principal failing of the unorganized pluralist system modeled above isthat group size is not sufficiently taken into account in the process of arriv­ing at an equilibrium, with the result that small, advantaged groups havegreater effects on outcomes than do larger, less advantaged groups (whichare alleged to represent more 'general' interestsj.Tt seems natural to askwhether some alternative pluralist system, characterized by a greater degreeof cooperation among the members of all groups, might not yield outcomeswhich are superior to the outcomes of an unorganized pluralist system. Anobvious alternative system is that characterized by perfectly cooperativegroup action. In addition to the fact that an organized system is the polaropposite of an unorganized system, a primary reason for according specialconsideration to this alternative is that perfectly cooperative group behavioris 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 thusprovide insight into the value of increased cooperation among groupmembers.

Figure 5 showed the outcomes of an unorganized pluralist system in thecases of equal and unequal groups. A similar figure could be drawn for anorganized pluralist system, and the results would be the same as in theformer case: in an organized pluralist system, the outcome shifts from thestatus quo in the direction favored by the larger, wealthier, more influential,and/or more intense group. The entire range of pluralist systems thusexhibits the same general properties, and distinctions between them can bedrawn only from a more detailed investigation of the sensitivity of varioussystems to variation in important political variables.

As Olson demonstrated, the degree of suboptimality associated withunorganized behavior increases with group size.24 This fact suggests thepossibility that an increase in the level of cooperation in group behaviormight result in an outcome more favorable to the larger group, thus correct­ing for some of the 'bias' inherent in unorganized systems. This reasoningmight also be applied to the other parameters of a group, thus allowing a

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comparison of the properties of outcomes of unorganized and organizedpluralist systems based upon the degree of suboptimality associated withunorganized group behavior. Such a comparison-Jails for two reasons: (1) itis impossible to reach general conclusions regarding the relationshipsbetween the degree of suboptimality and group wealth, influence and in­tensity of preference, and (2) even if this were not the case, it is not alwaystrue that the outcome in an organized system is more favorable to the groupwhose 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 problemsdo not arise. For instance, if individuals' preferences are given by Cobbs­Douglas utility functions, and certain assumptions are made about theparameters of these utility functions, then it can be shown that the degreeof suboptimality associated with unorganized behavior is an increasingfunction of group size, wealth, influence, and intensity of preference.V Inthis 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 someof the 'bias' against large groups, which is presumably desirable, but aconsiderable price is paid for this improvement. For in addition to beingmore favorable to large groups, outcomes in the organized system also favorthe wealthy. and/or the influential more than do the outcomes of theunorganized system, a fact which seems sufficient for us to reject the notionthat the outcome of an organized pluralist system is unambiguously superiorto the outcome of an unorganized system.

While the outcomes in the two systems which have been discussed sharecertain qualitative simiIarities, there are many important differences, and itis difficult to reach general nonnative conclusions about the properties ofoutcomes in different pluralist systems. Since unorganized and organizedsystems represent the extremes among pluralist systems, comparisons involv­ing systems with some intermediate degree of cooperation would run intothe same difficulties and indeterminacies encountered above. I turn nextto a system in which the degree of organization is different in the twogroups.

Mixed pluralist systemsOlson's characterization of the outcomes of pluralist systems that was citedearlier suggests that the asymmetry in the outcomes is due to varyingdegrees of organization among organizations. Variation in this parametercan 'cause greater asymmetries in outcomes than variation in any otherparameter. The degree of suboptimality associated with Coumot behaviorrelative to group rational behavior is severe for groups of even moderatesize, 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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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 groupsthat was shown to result from unorganized group behavior can be greatlymagnified if in addition the small group can achieve a greater degree ofcooperation among its members. Outcomes of this type correspond to oneof the off-diagonal equilibria (Euo or Eou) in Figure 4.

It seems to me that this type of system is the image of pluralist politicsthat is portrayed by most critics of pluralist politics, including Olson. Thismodel is not complete, however, unless it contains within it a model of theprocess by which groups organize that allows one to predict which groupswill successfully organize and which will not. Olson offers some commentson the difficulties which groups face in organizing, and argues that thereare greater barriers for large groups than small groups, but his argumentsfall far short of being a rigorous model of this process.I? The role of thepolitical entrepreneur, economies of scale in formal organizations, and theappropriateness of Olson's by-product strategy to groups of different sizesare only a few of the issues whose impact on the process of organizing agroup must be reckoned with. Until these and other issues are resolved, it ispremature to argue, on the basis of a collective goods model, that out­comes of pluralist political systems must possess the properties to the extentthat Olson has claimed. While these properties are generally present in theoutcomes of all pluralist systems, the degree to which they are present variesconsiderably, and therefore one should exercise caution in making sweepinggeneralizations about such outcomes.

Efficiency in pluralist political systemsA previous section considered the shift in the political outcome whichwould result if groups engaged in perfectly organized rather than un­organized behavior. It is important to distinguish between the shift favoringa given group and that group preferring the organized equilibrium to theunorganized equilibrium. The shift in outcome results from increasedexpenditures on political activity, and the question of whether the benefitsare worth the costs has not yet been addressed. As will become clear, anunorganized political process may be most efficient from the viewpoint ofall participants.

The efficiency with which any social process operates is a characteristicof considerable interest, and at first glance it would appear that any pluralistpolitical process is quite inefficient. This fact is most evident for the case ofidentical groups which oppose one another. In this case, as shown in Figure5, no net change in the level of x takes place despite the fact that bothgroups-have invested resources in lobbying to change the level. The fact thatthe effects of the resources invested in lobbying by the two groups canceleach other gives rise to the inefficiency in the process, for if both groupscould 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 legislationwould have passed with the same level of benefits as when lobbyingoccurred, and each individual would have consumed more of the privategood. The outcome which results from lobbying is thus not Pareto optimalsince 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 isinefficient 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 haveinvested resources in lobbying, it is difficult to reach agreement beforehandon the nature of an outcome which is unanimously preferred to the pluralistoutcome by all individuals. In a very real sense, the cancelling out of thepolitical efforts of the two groups is a necessary part of the process throughwhich society elicits the preferences of concerned individuals. The fact thathindsight will always show that there existed more efficient ways of reach­ing the same outcome is of less relevance if these more efficient ways cannotbe adduced in advance.

The notion of efficiency has some relevance, however, to the task ofcomparing alternative pluralist systems. For there will always be a greateramount of resources wasted (i.e. efforts which cancel each other out) ifgroups achieve some degree of cooperation rather than engaging in unorgan­ized behavior. In many instances, including the case of identical groups, thegroups find themselves in a situation analogous to the prisoner's dilemma.This is shown in Table I, which indicates the equilibria shown in Figure 4which result from combinations of organized and unorganized behavior bythe two groups. If the groups are relatively evenly matched in terms ofsize, wealth, influence, and intensity of preference, these equilibria will haveassociated with the utility levels that correspond to those in the prisoner'sdilemma. That is, each group would prefer to act in an organized mannerno matter that the other group does not, but both.prefer the equilibriumresulting from unorganized behavior to the equilibrium resulting fromorganized behavior, because the additional resources invested in lobbyingby both groups have only a minor effect on the fmal level of x, It thusappears that pluralist systems must choose between being suboptimal at oneof two levels. Group rational behavior within groups yields suboptimal out­comes at the system level, while suboptimal behavior within groups yieldsPareto optimal behavior at the system level. Participants in a pluralistsystem are thus faced with prisoners' dilemma games at both levels, andmust choose to succumb to the dilemma at one level or the other. It wouldseem 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 responsesto group demands. It might be thought that across-the-board increases in

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Table 1. The four possible equilibria.

Group 2

Group 1Unorganized

Organized

UnorganizedEu u

OrganizedEuo

responsiveness would be beneficial in a system in which outcomes are. formed in response to group behavior, but this is not necessarily the case. Ifincreased responsiveness (lower prices for changes in the level ofx) results ina greater allocation of resources to political activity due to an elasticdemand for the collective good x, the effect can be the same as that whichresults from an increase in the degree of organization, namely a decrease inthe efficiency of the process. On the other hand, if demand for x is priceinelastic, an increase in responsiveness may increase the efficiency of thepluralist system.

SummaryThis paper has presented a simplified model of a pluralist political systembased upon the theory of collective action developed by Mancur Olson.Using Olson's model, it has been shown that outcomes of unorganizedpluralist systems favor large, wealthy, influential, and/or intense groups, butthat variations in group size have much smaller effects on outcomes thanvariations in the other parameters. This disparity gives rise to the fact thatsmall, advantaged groups generally.have greater effects on outcomes thanlarger, less advantaged groups. It has also been argued that the notion of apotential group is entirely consistent with the model developed by Olson.

It has also been shown that the biases associated with unorganized groupbehavior are not substantially avoided if group behavior is characterized bya greater degree of cooperation. Increased cooperation generally shifts out­comes in favor of larger groups, which seems desirable, but it also shiftsoutcomes in favor of wealthy and influential groups as well, the desirabilityof which is certainly questionable. In addition, the fact that it has beenshown that greater cooperation within groups may result in a less efficientpolitical process makes it even more difficult to argue that a pluralist pro­cess involving increased cooperation would be an improvement over anunorganized process.

While proponents of pluralist political systems no doubt hold to a viewin which groups are similar in the degree of cooperation among groupmembers, critics of these systems often argue that differences in the degreeof 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 whichdetermines the pluralist outcome bears little resemblance to the balance ofthe 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 whichmay complicate the discussion to foUow. The discussion will at some times concernitself with what is optimal for the members of a given group and at other times withwhat is optimal for the entire set of individuals in two groups, arguing on one placethat 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 individualsand 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 thedecisions of regulatory agencies or other bureaucracies.8.The development of the model is taken from Chamberlin (1976). It is assumed thatx is a pure public good ('inclusive' in Olson's terminology) and that both goods arenormal goods.9.In this model price is a proxy for the influence (power) of a given group. To say thatone group faces a lower price for (changes in) the public good than another is to saythat, for a given investment of private resources, the first group can bring about agreater change in the level of the public good. Thus price varies inversely with thedegree of influence of a group.10.The role of the political entrepreneur in this process is particularly important, andhas been discussed by Richard Wagner (1966) and Norman Frolich, Joe Oppenheimerand Oran Young (1971).11.Chamberlin (1976).12.Figure 2 is not drawn to scale. In particular, the distance between the curves Ru andRo is much smaller than it would actually be. Unless demand for the collective isextremely price inelastic, the amount of the collective good provided through Cournotbehavior will usually be only a small fraction of the optimal amount. This differenceis understated in the figures for ease of presentation.

L1;1b1ic choice

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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 ofpluralist systems argue that the balance of group behavior reflects the balance of groupinterests, and this seems to me to embody the notion that the groups have identicalinterests at stake.15.The 'waste' resulting from investments in political activity which cancel each other willbe 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 adecrease in price on the unorganized outcome in Figure 1.17.I say 'expect' despite the fact that Olson reached the opposite conclusion with respectto the effect of group size. The conclusions regarding large and intense groups seem inaddition to be quite desirable. The desirability of the conclusions regarding wealth andinfluence may seem more questionable, but they nevertheless seem unavoidable in asystem based on voluntary individual choice.18.The discussion thus far has considered only groups made up of individuals. It ispossible to apply this model to federations of interest groups with common goals solong as one is wilting to treat these groups as unitary actors. In this case, group sizeswould be quite small and the above comments less applicable.19.This also means that the degree of suboptimality associated with unorganized behaviordoes not increase as precipitously as these parameters increase in value. As I haveshown elsewhere it need not even be the case that the degree of suboptirnality be anincreasing function of these parameters. See Chamberlin (I976).20.The term 'disadvantaged' is used here not in the sociological sense in which it is usuallyencountered, but in a technical sense to characterize a group which, relative to thegroup it opposes, possesses fewer of the resources (other than size) which positivelyaffect 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 thedegree 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 ispossible to draw versions of figure 5 in which a shift from unorganized to organizedbehavior shifts the outcome in favor of either group.26.See Chamberlin (I976). These utility functions arc characterized by straight lineincome-consumption curves through the origin and horizontal price-consumption curves.

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27.Olson, pp. 4448.28.In general, suppose the outcome is x = x o + lu. + lU:2 > X o and that Sx , > 0 andlu 1 > O. Then for lu~ =(lu. - lu1 ) and lu; =O,x =X o + tu~ .: tu; =x. The levelof 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 ofresources 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 ismore efficient than any other is sufficient for it to be regarded as the 'optimal' pluralistsystem. If the prices in the model and the value of X o could be manipulated by changesin 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 addedadvantage of being the most efficient pluralist system. It is also possible that theamount of resources invested in lobbying in an unorganized system, though smallerthan in any other pluralist system, will nevertheless result in a net welfare loss tosociety. Tullock (1971) pays particular attention to this case and shows that thechoice between an unorganized pluralist system and no system at all may also be aprisoners' dilemma game, in which no system at all is the Pareto optimal outcome.

References

Bentley, A.F. The Process ofGovernment. Chicago, University of Chicago Press, 1908.Chamberlin, J .R. 'Provision of Collective Goods as a Function of Group Size.' Ameri­

can 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.