Free-Riders Homework Help
These are the problems that arise as a result of the public goods. It happens when the people make use of the goods without paying for it. It is because of this problem that government takes the responsibility of producing the public goods. In case of the public goods, they can be used by anybody. There are no restrictions for its usage. This way there is no way of excluding the non-payers. This implies that everyone gets a free ride. Tutorspoint helps students to get Free-Riders Homework Help at their finger tip.
The Financing of Public Goods
When it comes to the production of these public goods, one needs to think how 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 government collects tax from both the free- riders (those who use the public goods) and the people who are not using the public goods. This way everyone gets to contribute for the public goods through the taxes they pay. This problem of free riders is also seen in the case of the common property.
The Reason for Free Rider Problems
It happens due to the non-excludability of the non tax payers. The tax payers get to enjoy the public goods as they are paying for it through the tax. But in case of the non taxpayers, there is no means by which they are paying for it. They still enjoy the benefits of the public goods. They will not be willing to come forward for the voluntary payments. Since there is no exclusion in the public goods, everyone gets to enjoy it including the non tax payers. 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 the public goods are unable to be exchanged in the market. These goods can never be produced by the 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.