How does the free-rider problem affect the provision of public goods?

Economics Public Goods Questions



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How does the free-rider problem affect the provision of public goods?

The free-rider problem affects the provision of public goods by creating a situation where individuals can benefit from the goods without contributing to their production or maintenance. Since public goods are non-excludable, meaning that once they are provided, it is difficult to exclude anyone from using them, individuals have an incentive to free-ride and let others bear the cost of providing the goods. This leads to underproduction or underinvestment in public goods, as the cost is not evenly distributed among all beneficiaries.