enfrptes

sendassignment@tutorspoint.com

Free Riders Homework Help

Online Tutorspoint assists in economics assignments, essay writing, and free-riders homework help to college and university students at a reasonable price.

What are Free Riders in economics?

These are the problems that arise as a result of public goods. It happens when people make use of the goods without paying for them. It is because of this problem that the government takes the responsibility of producing public goods.

In the case of public goods, they can be used by anybody. There are no restrictions on its usage. This way there is no way of excluding the non-payers. This implies that everyone gets a free ride.

What do you mean by Financing Public Goods?

When it comes to the production of these public goods, one needs to think about how the government is generating money for these goods. It is important to note that the money that comes from the voluntary payments is not enough for the production costs involved for the public goods.

This is why the government collects tax from both the free- riders (those who use public goods) and the people who are not using public goods. This way everyone gets to contribute to the public goods through the taxes they pay. This problem of free riders is also seen in the case of the common property.

What causes Free Rider Problem?

It happens due to the non-excludability of the non-taxpayers. The taxpayers get to enjoy the public goods as they are paying for them through tax. But in the case of the non-taxpayers, there is no means by which they are paying for it.

They still enjoy the benefits of public goods. They will not be willing to come forward for voluntary payments. Since there is no exclusion in public goods, everyone gets to enjoy them including the non-taxpayers.

This is the issue of the free riders. When people are given the option of a free public good and a good that is private for sale, then all would like to opt for the public good as there are no restrictions at all in this case.

This reason is why public goods are unable to be exchanged in the market. These goods can never be produced by private companies for sale, as nobody would want to buy this when there are public goods that are available to them for free.

In order to successfully produce more of these public goods, the government is right in collecting taxes from the people in order to get revenue to produce it.