Suppose that Martin owns a lighthouse and Lewis owns a nearby port.Martin's lighthouse benefits only those ships that enter Lewis's port.What is the preferred method to combat the free-rider problem
A)Martin charges a fee for all ships that pass by Lewis's port.
B)Martin charges Lewis a usage fee.
C)Martin can exclude Lewis's port from benefiting from the lighthouse by simply turning the power off.
D)Martin sells his lighthouse.

Question

Quizplus · Accepted Answer

Charging Lewis a usage fee aligns the benefits received by Lewis's port with the costs of maintaining the lighthouse, addressing the free-rider problem.

Suppose That Martin Owns a Lighthouse and Lewis Owns a Nearby