Economic Concepts: Free Rider and Public Goods

Free Rider Concept

• A free rider is an individual who benefits from a good or service without contributing to its cost.

Relation to Public Goods

• This issue primarily occurs with public goods, characterized by:
  • Non-rivalrous consumption: One person's use does not reduce availability to others.
  • Non-excludability: Individuals cannot be easily excluded from using the good.

Examples of Public Goods

• National Defense
• Weather Warning Systems

Implications of the Free Rider Problem

• High levels of free riding can lead to under-provisioning of public goods.
• To address this, government intervention is often necessary for the provision of public goods.

Role of Taxpayers

• Society (taxpayers) ultimately finances public goods to mitigate the free rider issue.