Question

A major issue in any international environmental agreement, but particularly for climate change, is overcoming free riding. Why is free riding an issue in international agreements? What types of free riding occur in the context of international agreements? What might be some ways of overcoming free riding?

Answer 1

Free riding is one of the market failure condition and is one of the major problem in the field of economics. It is the improper supply of commodities and services and it is happened when any people are made to consume the goods and services more than the reasonable amount or it may happen when any individuals pay lower than their reasonable amount.

Firstly, it is a non-enforceable treaty. Secondly, the information regarding the non compliance cost of countries cannot be fully obtained by other countries. A signal model can be analyzed by which the nations leading the negotiations of international agreement is able to disclose their self non compliance costs by the means of level of commitments that had been signed in the IEA. Because of this free riding benefits, the large number of countries had joined the IEA.

Some of the ways of overcoming free riding are :

• By implementing the system of equal taxation among all the people.

• By requesting the people for small level donations.

• By converting a public commodity into a private one. This enables all the people to pay for its usage and service.

Thanks!..