In order to eliminate a free rider problem or tragedy of the commons problem:
A)the social costs must be realized by the individual.
B)something must be done to alter individuals' trade-offs.
C)market participants must internalize the value of the externality.
D)All of these statements are true.

Question

Quizplus · Accepted Answer

All three statements are true and are important ways to eliminate free rider or tragedy of the commons problems. A) Realizing the social costs helps individuals understand the impact of their actions on the community as a whole, reducing the incentive to free ride. B) Altering trade-offs can make it less appealing to free ride and encourage more cooperative behavior. C) Internalizing the value of the externality means that the costs and benefits associated with the free rider problem are taken into account by market participants, reducing the incentive for free riding. Therefore, all three approaches are necessary to effectively address free rider or tragedy of the commons problems.

In Order to Eliminate a Free Rider Problem or Tragedy