Question

Explain what is meant and free riders and the tragedy of the commons.

Describe how they can be addressed through the generic policy mechanisms

Can we ever be successful in solving free rider and tragedy of the common’s problems? Why or why not? Explain

Answer 1

When people use resources, goods or services due to non-excludability and non-rivalry without paying for it, free rider problems emerge. It is an economic condition of market failure where free riders enjoy the benefits of resources freely at the cost of others payments leading to over consumption.

When people try to derive great benefits from shared resources that are freely available to them leading demands outweigh to supply, it is called as tragedy of commons. Tragedy of common is an economic problem where people exploit resources for their own benefits for an extreme level for which they don't need to pay without considering the utility of the resources for the betterment of society or future generation. Natural resources start depleting due to reckless use by people leading to many negative outcome.

In order to expel the inefficient underproductions of resources, goods and services, some generic mechanisms can be addressed which are as follows-

1. Imposing taxes on all the resources that are consumed freely by people which would help to divide the cost equally among everyone and reduce the burden of tax from those who pay for it for consumption and others consume it for free.

2. Declaring all public goods into private would force everyone to pay for it reducing the economic problems of free riders and tragedy of commons.

   3. Assigning ownership to the resources which automatically reduces the over consumption of resources by free riders as owners would be able to maintain their resources effectively by reducing it from misusing. When property rights are clearly defined and imposed, economic problems like free riders and tragedy of commons can be eliminated.

   The free riders and tragedy of commons problems can be reduced but can not be overcome. As the whole world has become a small village due to globalisation, the competition for better lives have made people more materialistic and selfish. People exploit their surroundings and natural resources just to fulfill their greed but not need. The competition of proving oneself better than the others in a society is the new trend of status symbol which make people go to any extend. So mere imposition of some generic mechanisms will eliminate the problem of free riders but tragedy of commons will still prevail. As those who pay for the resources are free to use the resources without any limitations, over consumption of resources will again affect the resources negatively.