By-product firms

Paul Pecorino

Chapter 13 in Elgar Encyclopedia of Public Choice, 2025, pp 93-98 from Edward Elgar Publishing

Abstract: Mancur Olson argued that one way a large group could provide itself with a public good is via the by-product mechanism. The by-product firm sells private goods to members of an interest group and then uses the profits to provide a public good. In Olson's original discussion, the public good in question is political action that provides nonexcludable benefits to an interest group. However, the analysis also applies to charitable or environmental goods. Thus, the by-product mechanism is present in some forms of corporate social responsibility. This chapter discusses some of the literature on this mechanism.

Keywords: By-product Firm; Public Goods; Corporate Social Responsibility (search for similar items in EconPapers)
Date: 2025
ISBN: 9781802207743
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