Practice question · Multiple choice
A concentrated interest of 500 firms each stands to lose 40,000 euros from a policy; a diffuse interest of 5 million consumers each stands to lose 4 euros. Why does Olson predict the smaller group prevails?
Hints
- Compare the totals: 20 million against 20 million.
- The totals are identical, so the difference is in the per-member incentive.
Show the answer
A. Each member's stake is large enough to justify organising, and free-riding is visible in a small group
Why
The totals are identical, 20 million euros each, which is what isolates the mechanism. What differs is the per-member stake and the visibility of shirking: 40,000 euros justifies a lobbying budget and a defector among 500 is noticed, while 4 euros justifies nothing and a defector among 5 million is invisible.
Practise Parties, Groups, Movements and the Media
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