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15 - Uncertainty and the theory of clubs

Published online by Cambridge University Press:  05 June 2012

Richard Cornes
Affiliation:
Australian National University, Canberra
Todd Sandler
Affiliation:
University of Southern California
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Summary

In Chapters 11–14 we examined club behavior when membership status, club utilization, club fees, and the operation of club facilities were known with certainty. Many important examples of clubs experience random use or random breakdowns in facilities, leading to the type of uncertainty to be analyzed here. For example, drivers entering a highway do not know the level of traffic (congestion) or the road conditions that they will encounter on a given trip. Thus, transit time, an important cost of highway use, may vary from one day to another. Military allies cannot know ahead of time where the alliance troops may need to be deployed to repel an attack. Maintenance of antiterrorist commando forces can be shared among nations, but the deployment of these forces to manage a crisis incident cannot be known ahead of time, so that utilization is uncertain. The same type of uncertainty characterizes a host of club goods, such as lending libraries, roadway emergency services, ambulances, and hospitals. Additionally, community members cannot determine beforehand how rapidly police or fire protection will be available when required. Many club and local public goods must therefore be allocated under conditions of uncertainty. In addition to the examples already given, tennis courts, golf courses, and swimming pools face stochastic elements on both the demand and supply sides.

Uncertainty can affect clubs, their members, and potential members in at least six ways.

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Publisher: Cambridge University Press
Print publication year: 1996

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