The excludability versus nonexcludability issue of the provision of goods is
A)not relevant to the free-rider problem.
B)not relevant to the issue of market failure.
C)relevant to the free-rider problem.
D)relevant to negative externalities, but not positive externalities.

Question

Quizplus · Accepted Answer

Excludability, or the ability to prevent non-payers from accessing the good, is directly related to the free-rider problem. Nonexcludable goods, such as public parks or national defense, are prone to free-riders who benefit from the good without paying for it. This leads to underproduction of the good in the market and is a form of market failure. Therefore, excludability plays a crucial role in determining the effectiveness of the private market in providing goods and services.

The Excludability Versus Nonexcludability Issue of the Provision of Goods