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date: 20 September 2019

Abstract and Keywords

The theory of collective action, as outlined by Mancur Olson, is presented. Olson argued that individuals are subject to free-riding behavior, which can be overcome by selective incentives. The larger is the potential group, the greater the hurdles to successful formation. Thus, smaller groups with more narrow interests are more likely to form, leading to an emphasis on policy reform that concentrates benefits to the group while diffusing the costs on greater society. The accumulation of such groups will slow growth, and this sclerotic effect is reversed due to institutional instability. This chapter develops a critical appraisal of the theory and the accumulated evidence in the literature that follows from Olson.

Keywords: collective action, public goods, free-riding, selective incentives, institutional sclerosis, interest groups, economic growth

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