"In general, social pressure and social incentives operate only in groups of smaller size, in the groups so small that the members can have face-to-face contact with one another. Though in an oligopolic industry with only a handful of firms there may be strong resenment against the "chiseler" who cuts prices to increase his own sales at the expense of the group, in a perfectly competitive industry there is usually no such resentment; indeed the man who succeeds in increasing his sales and output in a perfectly competitive industry is usually admired and set up as a good example by his competitors.
There are perhaps two reasons for this difference in the attitudes of large and small groups. First, in the large, latent group, each member, by definition, is so small in relation to the total that his actions will not matter much one way or another; so it would seem pointless for one perfect competitior to snub or abuse another for a selfish, antigroup action, because the recalcitrant's action would not be decisive in any event. Second, in any large group everyone cannot possibly know everyone else, and the group will ipso facto not be a friendship group; so a person will ordinally not be affected socially if he fails to make sacrifices on behalf of his group's goals."(pg. 62)
Because smaller groups can exert these social (as well as economic) pressures, they are much more able to get around this problem. This leads to the result that smaller groups (or what some would call "Special Interest Groups") are able to have policies enacted which hurt the country as a whole. "In the sharing of the costs of efforts to achieve a common goal in small groups, there is however a surprising tendency for the "exploitation" of the great by the small."(pg. 3).
In the last section we'll take a look at an example of one of thousands of public policies that take money from many and give it to few.
Be sure to continue to page 4
