Question

how do free riders get excluded from consuming collective goods

Answer 1

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The free rider problem is a situation where some individuals consume more than their fair share or pay less than their fair share of the cost of a shared resource. It is a market failure that occurs when people take advantage of being able to use a common resource, or collective good, without paying for it, as is the case when citizens of a country utilize public goods without paying their fair share in taxes. The free rider problem only arises in a market in which supply is not diminished by the number of people consuming it and consumption cannot be restricted. Goods and services such as national defense, metropolitan police presence, flood control systems, access to clean water, sanitation infrastructure, libraries and public broadcasting services can be obtained through free riding.

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Answer 2

The free riders get excluded from consuming collective goods due to market failure. It takes place when there is no proper distribution of goods or services in the markets. This happens when some people are allowed to consume more than their fair ‘share of the resources’ shared by them or they pay less amount of money than their fair ‘share of the costs’.

Explanation:

• The problem of free-rider is a form of ‘market failure’ because the people who benefit from the resources used or the goods or services in the markets do not pay for them.  

• It is free to access to goods and using them without having to pay for them.  

• This can eventually lead to the under-provision of certain goods and services.

Learn more about collective goods

Think of other examples where collective provision of goods and services is cheaper than individual provision.

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