The Private Production of Public Goods: Organizational Maintenance, Managers' Objectives, and Collective Goals

Publisher Website
Google Scholar
Abstract
I reformulate Mancur Olson's by-product theory of collective action as a theory of resource allocation by interest group managers. I then test alternative hypotheses about managers' objectives drawn from exchange theory and commitment theory. Financial data for 16 environmental citizen groups show that the production of public goods is subsidized by other activities, and revenues from member dues are not affected by spending on public goods. Spending on selective incentives and information generates revenues but also may contribute to the pursuit of collective goals. Estimated marginal revenues from fund-raising and selective incentives show that environmental citizen group managers are not preoccupied with maximizing revenues. Rather, they seek to maximize either spending on public goods or net resources available for influencing public policy and the environment, subject to a budget constraint.
Keywords