New Evidence for the Theory of Groups

Group theorists led by Olson have observed that common interests do not produce collective action, except under conditions that overcome the free-rider incentive. While collective action theories have captured the imagination of the discipline, there has been surprisingly little examination of the relationship between business collective action and patterns of market structures. Research has instead focused more on firm-level political activity. Accordingly, this research addresses the original theoretical propositions by examining industry associations' political activity nationally. Some forty years after the formulation of the theoretical argument, we find evidence supporting the logic of collective action. More concentrated industries are likelier to have politically active associations than more competitive industries.