All “NG” up an Clubs?/ some Notes on the Current Status of Club Theory

Abstract

This article aims to analyze two aspects of the theory of clubs which are currently matters of some controversy: the question of optimal club size and the distinction between clubs and firms. Both aspects become of interest when the optimal number of clubs is small relative to population. In the case where population is relatively large, the original Buchanan determination of "optimal" club size is essentially correct, but there is no substantive difference between clubs and firms. In the case where optimal club size is relatively large, the Ng criticism of Buchanan's analysis is somewhat more appropriate— though, as we show, only strictly valid in one rather special case. In this quasi-monopoly setting, the distinction between clubs and firms becomes substantive, and is explored in this article under plausible assumptions.