ABSTRACT
This chapter pursues four related themes: (a) the emergence of club-based consumption in modern cities; (b) the transfer of governance functions to contractual communities (networks of co-consumers and co-producers); (c) transaction costs as an explanatory device; and (d) a critique of the network governance paradigm. The network paradigm has been used for a long time in the sociological and business literature. The club paradigm, in contrast, has principally served economists with a powerful model of “connected consumption.” The economic theory of clubs was formalized as a generalization of Paul Samuelson’s theory of public goods in a seminal paper by James Buchanan (1965). It has since generated a huge literature, which is well summarized in Richard Cornes’ and Todd Sandler’s authoritative review (1996). There are obvious parallels between the notion of a club and a network and it is surprising that little has been written on their similarity. An e-journal abstract search on the two key words threw up only one such paper – Roberta Capello’s Urban Studies paper (2000) examines the network externalities of city networks, which are also viewed conceptually as clubs (and the network externalities as club goods).
