External Threat and Collective Action

By Niou, Emerson M. S.; Tan, Guofu | Economic Inquiry, July 2005 | Go to article overview

External Threat and Collective Action


Niou, Emerson M. S., Tan, Guofu, Economic Inquiry


I. INTRODUCTION

Individuals with common interests usually attempt to further their welfare by acting collectively. Examples of collective action include the provision of a public good or collective good, the establishment of clubs, and the formation of alliances or political parties. In his seminal work The Logic of Collective Action, Olson (1965) uses the provision of collective goods as an example to discuss collective action problem or coordination failure. In particular, he analyzes how group size and the distribution of individual benefits of a collective good may affect the provision level of the good. Two of the most celebrated propositions from his book are the suboptimality proposition--"the larger the group, the farther it will fall short of providing an optimal amount of a collective good" (p. 35), and the exploitation proposition--"there is a systematic tendency for "exploitation" of the great by the small" (p. 29). These propositions have generated a broad research effort in collective action problems in economics and political science. Many scholars have examined the validity of these propositions. (1) A limitation of Olson's theory is that he analyzed collective action problems as phenomena within a single group, while assuming that external threat to a group either does not exist or is treated as a constant. In many cases, however, two or more groups compete against each other. In these situations, a group's provision of collective goods might be affected by the configurations of its own group and the competing groups and relative strength of the groups.

To illustrate, assume that two alliances of states, say, A and B, are competing for supremacy. An increase in A's military spending poses a greater threat to B's security. In response to the heightened threat, members of B might feel the need to increase their military spending, which in turn could affect the military spending decisions of members of A. Bruce (1990) develops a model that endogenizes external threat in a three-country model with two allies and one adversary. Interest group lobbying is another example. To understand a group's lobbying behavior, scholars often focus on the number and size of firms within the group and their geographical distribution. However, the configuration of a competing interest group and the two groups' relative strengths should also figure into an individual firm's decision concerning the appropriate contribution to its group's lobbying efforts. Other examples include party discipline, voter turnout (Ledyard 1981, 1984; Palfrey and Rosenthal 1983), electoral coalitional politics (Tsebelis 1990; Hausken 1995a, b), negative campaigning in primary elections (Newman and Niou 2000), factional rivalry in civil wars, and joint ventures for research and development in industrial organizations. All these examples point to the importance of external threat in explaining the logic of collective action.

In this article, to study simultaneously the way intergroup competition and intragroup collective action interact, we develop a collective good model that endogenizes external threat. In the context of competition between two groups, a group can be either defensive or offensive in nature. We define a group as defensive if its fighting capacity can be used only to defend its own resources; a group is offensive if its fighting capacity can be used to expropriate resources from its rivals as well as protect its own resources. We realize that empirically it is difficult to determine whether a group is offensive or defensive. But theoretically it is useful to know how the offensive or defensive nature of a group can affect the collective action problem. We analyze collective action problems when: (1) one of the groups is offensive whereas the other is defensive, and (2) both groups are offensive, respectively. Also, in group competition, if conquests are economically profitable, the way spoils of victory are divided among group members can also affect collective action. …

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