Answer to Question #217614 in Microeconomics for Hawalul

Question

The free rider problem refers tothe temptation of individual to let others provide the public goods. With relevant example show that purely individualistic mechanisms will not generate the optimal amount of public good because of the free rider problem.

Answer 1

The free rider problem tend to be an economic term describing a market failure in which individuals have access to services, resources or goods they do not pay for. There may be an oversupply of products, services or goods when the riders are many. Because of that, there will be an issue concerning the free riders. Based on public goods, this tends to be a typical occurrence (goods having non-excludable benefits).