ABSTRACT
The concept of an economic club was first formulated explicitly by Buchanan in a paper published in 1965. Since then, a few other papers on the subject have been published, notably those of Pauly (1968, 1970), McGuire (1972, 1974), and Ng (1973, 1974). Following Buchanan's initial development, however, the tendency has been to assume that access to the club good can be controlled, and to compare the competitive solution with the Pareto optimal solution. In general, it has been found that Pareto optimality can be achieved, but that market failure may occur if (1) the club is controlled by its members (the consumers of the good), who maximize the benefit per capita and not the total benefit (Ng, 1974); it may be noted here that Ng implicitly assumes that the club good, although expandable, is not reproducible, so that it is not possible for rival clubs to be set up by the persons wishing to enter the club but excluded from it; (2) the club good is provided by a local government elected by its consumers, who fail to reveal their preferences (McGuire, 1974); (3) the number of members cannot be allocated to the desired club membership without having some left over (Pauly, 1970).
