Free rider problem

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This article is about an economic and political phenomenon. For the stock market term, see Free riding. For free rides on freight trains, see Freighthopping. For free rides on any type of vehicle, see Stowaway.

A free rider, in economics, refers to someone who benefits from resources, goods, or services without paying for the cost of the benefit. Free riders are usually unwilling to pay for them. The term "free rider" was first used in economic theory of public goods, but similar concepts have been applied in to other contexts, including collective bargaining, antitrust law, psychology and political science.[citation needed] Free riding may be considered as a free rider problem when it leads to under-provision of goods or services, or when it leads to overuse or degradation of a common property resource.[1] An opposite concept is that of a forced rider.

Although the term originated in economic theory, similar concepts have been cited in political science, social psychology, and other disciplines. Some individuals in a team or community may reduce their contributions or performance if they believe that one or more other members of the group may free ride. If the number of damaged parties is large, government taxes or regulation may intervene to keep this free rider problem to a minimum.[2]

Examples[edit]

  • In a labor union, free riding occurs if an employee pays no union dues or agency shop fees, but benefits from union representation.

See also[edit]

Notes[edit]

  1. ^ Baumol, Willaim (1952). Welfare Economics and the Theory of the State. Cambridge, MA: Harvard University Press. 
  2. ^ http://som.eldoc.ub.rug.nl/FILES/reports/themeA/2003/03A42/03a42.pdf

References[edit]

  • Cornes, Richard; Sandler, Todd (1986). The Theory of Externalities, Public Goods and Club Goods. New York: Cambridge University Press. ISBN 052130184X. 
  • Venugopal, Joshi (2005). "Drug imports: the free-rider paradox". Express Pharma Pulse 11 (9): 8.  This article refers to the free-rider problem in global pharmaceutical research.

External links[edit]