Protecting people from being 'canceled' or kicked out of professional groups actually ruins the benefits those groups provide to everyone else.
April 2, 2026
Original Paper
"Private" Governance Is Actually a Club Good
SSRN · 6439378
The Takeaway
Courts often intervene when private networks (like trade associations or professional bodies) try to ostracize a member, viewing it as a matter of fairness. This paper argues that the power to exclude is exactly what makes these groups work; when the law makes it impossible to kick out rule-breakers, the quality of governance collapses and the public loses a valuable social regulator.
From the abstract
Network governance is a club good. Courts that displace a network’s authority to ostracize rule-breakers weaken the excludability that makes governance valuable to members and non-members alike. When the ostracism mechanism loses credibility, members defect from governance obligations, governance quality declines, and the positive externalities governance creates for non-members disappear. Courts should therefore recognize doctrines that defer to network decisions as implicit Pigouvian subsidies