ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The underlying incentive which generates the free-rider problem can be explained via the application of the Prisoner’s dilemma, within the context of contributing to a public good.

Detailed explanation-2: -The cause of the free rider problem stems from the fact that public goods are non-excludable and non-rival. Non-excludable means you and everyone else enjoy the public good as a common resource without exclusion. Non-rival consumption means you don’t have to compete with one another to enjoy the service.

Detailed explanation-3: -Free riding prevents the production and consumption of goods and services through conventional free-market methods. To the free rider, there is little incentive to contribute to a collective resource since they can enjoy its benefits even if they don’t.

Detailed explanation-4: -The Free-Rider-Problem is closely connected with the theory of public goods.

Detailed explanation-5: -The free rider problem can be overcome through measures that ensure the users of a public good pay for it. Such measures include government actions, social pressures, and collecting payments-in specific situations where markets have discovered a way to do so.