The free-rider problem arises when:

Question

Quizplus · Accepted Answer

The free-rider problem occurs when a good or service is non-excludable, meaning it is impossible or inefficient to exclude people from using it, such as with public parks or national defense. This allows individuals to benefit from the good without paying for it, leading to a lack of incentive for individuals to contribute to its production. This creates an issue of market failure, as the production of the good is not efficient without a way to ensure that those who benefit from it also contribute to its production costs.

The Free-Rider Problem Arises When