POLITICAL SUCCESS, GOVERNMENT SUBSIDIZATION, AND THE GROUP FREE RIDERPROBLEM

John Mark Hansen has proposed an explanation of how interest groups ov ercome the free rider problem: ''political success'' leads to governme nt subsidization, which allows groups to solve the free rider problem by reducing the costs of organization and by providing the public good pursued by the group. The authors show that this argument is contradi cted by the ''union substitution'' hypothesis developed in labor econo mics and propose a solution to the subsidization effect based on corpo ratist practices in Europe.