Free-rider problem

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In economics, the free-rider problem is a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them^[1] or under-pay. Examples of such goods are public roads or public libraries or other services or utilities of a communal nature. Free riders are a problem for common pool resources because they may overuse it by not paying for the good (either directly through fees or tolls or indirectly through taxes). Consequently, the common pool resource may be under-produced, overused, or degraded.^[2] Additionally, it has been shown that despite evidence that people tend to be cooperative by nature (a prosocial behaviour), the presence of free-riders causes cooperation to deteriorate, perpetuating the free-rider problem.^[3]

The free-rider problem in social science is the question of how to limit free riding and its negative effects in these situations. Such an example is the free-rider problem of when property rights are not clearly defined and imposed.^[4] The free-rider problem is common with public goods which are non-excludable and non-rivalrous. Non-excludable means that non-payers cannot be stopped from getting use of or benefits from the good. Non-rival consumption stipulates that the use of a good or service by one consumer does not reduce its availability for another consumer. These characteristics of a public good result in there being little incentive for consumers to contribute to a collective resource as they enjoy its benefits.^{[according to whom?]}

A free rider may enjoy a non-excludable and non-rivalrous good such as a government-provided road system without contributing to paying for it. Another example is if a coastal town builds a lighthouse, ships from many regions and countries will benefit from it, even though they are not contributing to its costs, and are thus "free riding" on the navigation aid. A third example of non-excludable and non-rivalrous consumption would be a crowd watching fireworks. The number of viewers, whether they paid for the entertainment or not, does not diminish the fireworks as a resource. In each of these examples, the cost of excluding non-payers would be prohibitive, while the collective consumption of the resource does not decrease how much is available.^{[citation needed]}

Although the term "free rider" was first used in economic theory of public goods, similar concepts have been applied to other contexts, including collective bargaining, antitrust law, psychology, political science, and vaccines.^[5][6] For example, 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.^[7]

The economic free-rider problem is equally pertinent within the realm of global politics, often presenting challenges in international cooperation and collective action. In global politics, states are confronted with scenarios where certain actors reap the benefits of collective goods or actions without bearing the costs or contributing to the efforts required to achieve these shared objectives. This phenomenon creates imbalances and hampers cooperative endeavors, particularly in addressing transnational challenges like climate change, global security, or humanitarian crises. For instance, in discussions on climate change mitigation, countries with lesser contributions to greenhouse gas emissions might still benefit from global efforts to reduce emissions, enjoying a stable climate without proportionally shouldering the costs of emission reductions. This creates a disparity between states' contributions and their gains, leading to challenges in negotiating and implementing effective international agreements. The economic free-rider problem's manifestation in global politics underscores the complexities and obstacles encountered in fostering collective action and equitable burden-sharing among nations to address pressing global issues.^[8]