Question

What is free riding? How is free riding related to the need for public goods?

Short answer

Free riding is a situation where people benefit from public goods without contributing to their costs. It is related to public goods in that it can result in the underprovision of such goods due to insufficient funds, as free riders are not contributing towards these costs.

Step-by-step solution

Understanding Free Riding

Free riding occurs when people take advantage of a public good without contributing to its cost. The concept is named as such because these individuals or groups ’ride’ off the expense and effort of others, without making their own contribution.

Understanding Public Goods

Public goods refer to commodities or services that are provided without profit for all society members. Examples of public goods include clean air, street lighting, and public parks. These goods are usually funded by taxes and are available for everyone to use, regardless of their contribution to taxes.

Connection between Free Riding and Public Goods

Free riding is closely connected to public goods as individuals or groups can benefit from those goods without contributing to them. While this situation can be unavoidable due to the nature of public goods, excessive free riding can lead to the under-provision of these goods because the cost falls solely on the part of the population that contributes towards them. This can result in issues such as insufficient funds to maintain or improve these goods.