Public goods can lead to free rider problems from "summary" of Public Finance by Harvey S. Rosen
Public goods are goods that are non-excludable and non-rival in consumption. This means that individuals cannot be prevented from consuming the good, and one person's consumption of the good does not reduce the amount available for others. Examples of public goods include national defense, clean air, and lighthouses. Due to their non-excludable nature, individuals can benefit from public goods without having to pay for them. This creates a free rider problem, where individuals have an incentive to "ride free" on the contributions of others. Since individuals cannot be excluded from enjoying the benefits of public goods, they may choose not to contribute to their provision, hoping that others will cover the costs instead. The presence of free riders can lead to under-provision of public goods. If everyone acts in their own self-interest and chooses not to contribute, the public good may not be provided at all or may be provided ...Similar Posts
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