The Exploitation Hypothesis in a Public Good Economy: Some Extensions

Abstract

Since Olson’s (1965) The Logic of Collective Action, the exploitation hypothesis, in which the rich shoulders the provision burden of public goods for the poor, has held sway despite empirical exceptions. To address such exceptions, we establish two alternative exploitation hypotheses based on asymmetric preferences or on productivity differences regarding the public good. The classic hypothesis and its two variants are proven in a novel fashion. Our theoretical insights are then illustrated by some empirical examples from the field of international public goods, such as military defence and cross-border pollution.