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Chapter 13: Q.15 (page 316)

What is the free rider problem?

Short Answer

Expert verified

Free riders are those who want other people to fund a public good and then intend to use it themselves.

Step by step solution

01

Content Introduction

Some people become free-riders because public products are nonexcludable and non-rival.

02

Content Explanation

When consumers make purchasing decisions, a paradox might arise in which customers have incentives to let others pay for the public good and then "free ride" on everyone else's spending since once a public good is supplied, it is accessible to all. Providing a certain public good will not be efficient if numerous people act as free riders.

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