A private agreement between bargainers may not take place because of

Question

Quizplus · Accepted Answer

Free-rider problems occur when individuals benefit from a public good without contributing to its production, which can deter bargaining from taking place. Negative externalities also make bargaining difficult because the costs of an activity are borne by someone who is not party to the agreement, leading to disputes over who should pay those costs. The tragedy of the commons refers to a situation where individuals overuse a shared resource, which can also complicate bargaining. Positive externalities, on the other hand, could serve as an incentive to bargain. However, since all the given options except (D) can discourage bargaining, (E) is also incorrect.

A Private Agreement Between Bargainers May Not Take Place Because