Collective action

The economic theory of collective action is concerned with the provision of public goods (and other collective consumption) through the collaboration of two or more individuals, and the impact of externalities on group behavior.

Related Topics:
Public good - Externalities

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The foundational work in collective action was Mancur Olson's 1965 book The Logic of Collective Action: Public Goods and the Theory of Groups.

Related Topics:
Mancur Olson - 1965

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The theory explores the market failures where individual consumer rationality and firms' profit-seeking do not lead to efficient provision of the public goods, i.e. where another level of provision would provide a higher utility at a lower cost.

Related Topics:
Market failure - Consumer rationality - Efficient - Utility

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Note, however, that the theory is not necessarily a challenge to the invisible hand principle of Adam Smith. It only limits the domain in which that principle applies: for purely private goods in ideal competitive markets, the pursuit of self-interest is still efficient.

Related Topics:
Invisible hand - Adam Smith - Private good - Competitive market

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Besides economics, the theory has found many applications in political science, sociology, anthropology and environmentalism.

Related Topics:
Political science - Sociology - Anthropology - Environmentalism

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