An Uber Theory of Clubs

Last week while I was reading "An Economic Theory of Clubs," I found myself largely agreeing with the distinctions that Buchanan made from Samuelson on the notion of public goods. Then I saw the graph on the second to last page and felt the magnetic pull that all Econ nerds feel when they see cost curves. Normally, I get the intuition behind the graphs that I see, but this time it was different.  This benefit curve sloped up at first and that made no sense to me. Buchanan was saying that it is possible for an individual's benefit to increase from sharing a good with another person and he used this to discuss the degrees of publicness that a good could have.

Feeling assured by the quickly approaching final page of the paper, and my unearned arrogance, I hastily scribbled on my copy "Why would it increase at all?" I felt just as assured of this when I entered class and still assured after I left it. "Who would want to share a pool when they don't have to?" I kept asking myself that question, because I would certainly rather have a pool or probably anything to myself rather than split with someone else. Having accepted the fact that I was right and the paper wrong, my thoughts turned to my plans for the evening and how one friend would have to Uber over to a restaurant where we were meeting. The only problem was that she refuses to take Ubers alone.

Then it hit me, I should have known not to think I'd outsmarted a Nobel laureate, it was entirely possible that for some people, my friend included, Uber functions as a club the way Buchanan described.  For my friend, there is almost no benefit to riding an Uber by herself.  She can back up this belief with a poor record of safety for women in Ubers. Her benefit from an Uber increases dramatically with the addition of another person and then falls as the car gets too crowded and hot. Further, the cost curve of an Uber reflects the same fixed cost that gets spread over more and more people that Buchanan illustrated. So, while I still believe strongly that a swimming pool does not follow the curves of Buchanan's clubs, I will admit that, for some, an Uber pool just might.