If markets underproduce public goods because of the free rider problem,:

Question

Quizplus · Accepted Answer

When markets underproduce public goods, it becomes more efficient for the government to tax individuals to pay for the production of the public good. This is because public goods have the characteristic of non-excludability, which means that one person cannot be excluded from consuming the good once it is provided. Therefore, it is difficult for markets to allocate resources efficiently towards the production of such goods as there is no way to enforce payments from those who consume the good without paying for it. By using taxes, the government can spread the cost of the public good across society and ensure that everyone contributes to its provision. This helps to overcome the free rider problem and ensures that the public good is produced at the socially optimal level.

If Markets Underproduce Public Goods Because of the Free Rider