The Logic of Collective Action Rather it was that those who organize such action need to find some way of giving incentives for people to join in paying for the collective action. Olson called this the “by-product theory.” An organized group would sell something to members and use any above-normal profits to lobby.

Olson's theory explores the market failures where individual consumer rationality and firms' profit-seeking do not lead to efficient provision of the public goods, i. e. where another level of provision would provide a higher gain at lower expenses.

In the move from roving to stationary bandits, Olson sees the seeds of civilization, paving the way, eventually for democracy, which by giving power to those who align with the wishes of the population, improves incentives for good government.

The theory shows that most organizations produce what the economist calls “public goods”—goods or services that are available to every member, whether or not he has borne any of the costs of providing them.