When a good is an open-access resource,the free-rider problem effectively defeats the chances that a socially efficient equilibrium can be achieved through property rights assignments and bargaining.

Question

Quizplus · Accepted Answer

When a resource is open-access, there are no property rights assigned to it and anyone can use it without paying. This creates a situation where individuals have an incentive to engage in overuse or overexploitation of the resource, as they do not bear the full cost of their actions. This is known as the tragedy of the commons or free-rider problem, and it makes it difficult to achieve a socially efficient equilibrium through property rights assignments and bargaining. Thus, the statement is true.

When a Good Is an Open-Access Resource,the Free-Rider Problem Effectively