Lee, Georgallis & Struben, 2022 - Market Uncertainty - Collective Action Problems

4 important questions on Lee, Georgallis & Struben, 2022 - Market Uncertainty - Collective Action Problems

What are examples of Collective Action Problems? List the 5

  • Using public transport
  • Striking/protesting
  • Paying taxes
  • Investing in R&D
  • Market formation efforts.

Why is striking a Collective Action Problem?

If you want to strike for higher wages, and do it together you can get more done, but each worker is better off not striking and getting a pay cut.

Why is taxes a Collective Action Problem?

It is better for each individual not to pay taxes but if we all do, there is more for the government to spend on better services.
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The most important Collective Action Problem here is around Market formation efforts, elaborate shortly.

Creating industry standards or try and create consumer awareness about what a product is can be beneficial for the industry but each firm is better off if someone else does it and they can free ride.

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