Suppose a downtown business owner wants to convince the owners of nearby businesses to renovate their buildings to make the downtown area more attractive to shoppers.The problem that is likely to prevent this plan from going into action is called the:

Question

Quizplus · Accepted Answer

The free rider problem refers to the situation where people can benefit from a public good or collective action without contributing to its provision. In this case, other downtown business owners may not want to incur the cost of renovating their buildings if they believe that they will still reap the benefits of a more attractive downtown area without doing so. This can create a collective action problem where no one takes action even though it would benefit everyone.

Suppose a Downtown Business Owner Wants to Convince the Owners