The Long-Run Advantages of Centralization for Collective Action: A Comment on Bendor and Mookherjee

Edward P. Schwartz and Michael R. Tomz

American Political Science Review, 1997, vol. 91, issue 3, 685-693

Abstract: Institutional design can affect the logic of ongoing collective action in groups with heterogeneous members. This article corrects a mathematical error in a seminal article by Bendor and Mookherjee (1987) and shows how the amended result strengthens the case for centralized monitoring and enforcement mechanisms. In solving their original model, Bendor and Mookherjee neglected that groups under centralized control will become increasingly talented over time, as headquarters detects and replaces untalented members. Expected improvements in the talent of the group should heighten the incentive for its members to work and curtail the incidence of costly free riding, as well as reduce the average per-worker cost of production. These gains in efficiency will not materialize in decentralized regimes, where the fraction of talented members will remain constant over time. Depending on the effectiveness of monitoring in the centralized group and the level of patience and talent in society as a whole, centralized regimes can produce greater group welfare than decentralized ones, even when decentralized institutions operate flawlessly.

Date: 1997
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