Forced rider

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A forced rider in economics is a person who is required, by government or other collective, to share in the costs of goods or services without benefiting from them. Such goods are typically non-excludable.[1][2]

Theory[edit]

Public goods are non-excludable and non-rivalrous. As a result, some people may benefit from a public good without helping to cover the costs of production. This is known as the "free rider problem".[3][4]

Collective payment schemes, such as taxes, have historically been used to address the free rider problem. However, compulsory payments may create situations in which individuals are required to contribute to the cost of public goods from which they receive no benefit. This is called the "forced rider problem".[5]

Forced riders in taxation[edit]

The forced rider has been cited in various authors' views concerning taxation.

  • Pacifists are required to pay for national defense.[6][7][8][page needed]
  • Environmentalists may be required to pay for public works projects, such as dams, which they feel destroy natural habitats in ways they do not condone.[6]
  • In a unionized workplace, non-union as well as union members are required to pay dues to the union representing the workplace.[citation needed]
  • Healthy and insured individuals being forced via an individual mandate to subsidize insurance for unhealthy and previously uninsured individuals. Previously uninsured individuals are now free riders.[citation needed]

References[edit]

  1. ^ Cowan, Tyler. "Concise Encyclopedia of Economics". Public Goods. Library of Economics and Liberty. Retrieved 27 February 2013. 
  2. ^ Austrian Methodology: The Preferred Tax Type. Books.google.com. Retrieved 2013-11-30. 
  3. ^ Providing Global Public Goods[dead link]
  4. ^ Multipart pricing of public goods bbs.cenet.org.cn
  5. ^ "Public Goods and Public Choices" (PDF). Retrieved 2013-11-30. 
  6. ^ a b "The Myth of Neutral Taxation" (PDF). Retrieved 2013-11-30. 
  7. ^ Richard Cornes Todd Sandler (1994-07-01). "Are Public Goods Myths?". Jtp.sagepub.com. Retrieved 2013-11-30. 
  8. ^ Modern Principles of Economics. Books.google.com. Retrieved 2013-11-30.