Question

Every student who has ever worked on a group project has had to consider the free rider problem. On a societal level, broad taxation is often used to solve the problem. Are there other ways to get around the problem? How does one justify the inefficiencies often associated with governmental provision of necessary goods and services? How does one balance individual rights with the need to provide for the greater good?

Answer 1

There can be two other ways of solving a free rider problem -

a.) Taking donations: The donations that are willingly given by few people in the society will cover up the cost of free riders as well. Most people in the society will not be hesitant towards donating small amounts that can cover up the cost of public goods even if the free riders do not pay their share.

b.) Turning the public good into a private good: Some public goods like roads or museums can be turned into a private good by requiring the users to pay a toll before using the road or entering the museum. This will be a great way to recover the cost associated with the building of these goods and also solve the porblem of free riding.

Governmental provision of necessary goods and services is necessary because not everyone in the society can pay for these goods and services from their incomes. Also, some of these goods are essential services and left to private institutions, these goods are either extremely high priced or not produced at all due to their negative profitability. No private entity will have enough incentive to provide these goods to the society, a consequence of the problem of free riding. This is because there are so many free riders in the society, everyone thinks that it is better if someone else pays for the good so that theycan be the free riders and hence no one ends up paying for it. These include essential services like street lighting, national defence, garbage collection, etc. Thus, the government has to pay for these services, even as there are inefficiencies associated with them, because these services are essential for the society.

There are certain unavoidable individual rights. However, if they come at the cost of the greater good of the society then they are seldom upheld. At the times of emergency when upholding individual rights can cause harm to then entire society, all fundamental rights are scrapped. Individual rights are important but only as long as they do not come in the way of the greater good. The problem of free riding can somewhat be explained through this. Although it is not fair to make all taxpayers pay for certain goods that even free riders are free to use, it is definitely still required as here, the need to provide for the greater good of the community is more important than the taxpayers individual rights.