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The free rider problem is the burden on a shared resource that is created by its use or overuse by people who aren't paying their fair share for it, or who aren't paying anything at all.
The free rider problem can occur in any community, large or small. In an urban area, a city council may debate whether and how to force suburban commuters to contribute to the upkeep of its roads and sidewalks or the protection of its police and fire services. A public radio or broadcast station devotes airtime to fundraising in hopes of coaxing donations from listeners who aren't contributing.
The free rider problem is considered an example of a market failure in economics. That is, it is an inefficient distribution of goods or services that occurs when some individuals are allowed to consume more than their fair share of the shared resource or pay less than their fair share of the costs.
Free riding prevents the production and consumption of goods and services through conventional free-market methods. To the free rider, there is little incentive to contribute to a collective resource since they can enjoy its benefits even if they don't. As a consequence, the producer of the resource cannot be sufficiently compensated. The shared resource must be subsidized in some other way, or it will not be created.
The free rider problem as an economics issue only occurs under certain conditions:
Economists point out that no business would voluntarily produce goods or services under these conditions. When the free rider problem looms, businesses back away. Either the shared resource will not be provided, or a public agency must provide it using taxpayer funds.
As an economic issue, the free rider problem occurs when everyone can consume a resource in unlimited amounts, no one can limit anyone else's consumption, but someone has to produce and maintain the resource.
On the positive side, some people in every community will demonstrate that they feel a responsibility to pay their fair share. Some combination of a high sense of trust, positive reciprocity, and a sense of collective duty makes them willing to pay their fair share.
The free rider problem can crop up when the resource is shared by all and free to all. For instance, if a community sets voluntary pollution standards that encourage all residents to cut back on carbon-based fuels, many will respond positively. But some will refuse to make any change in their habits. If enough follow the standards, the air quality will improve and all the residents will benefit equally, even the free riders. If not enough follow, then air quality might suffer to the detriment of all residents, including those who did scale back on pollution.
Communities that face a free riding problem may try any of several solutions.
Free rider problems are visible throughout everyday life. Some of the most obvious ones concern shared or public resources. Consider public parks or local beaches. They are typically free for all to use, with little to no barriers to access. While most individuals might be considerate in their enjoyment, there may be small fraction of visitors who litter on the grounds or damage equipment. Alternatively, the sites may be overrun with visitors during holidays or weekends. These scenarios then impose a greater burden on the cost of maintaining the resource, and may even impair its availability in the future.
As in public spaces, the free rider problem may also arise in the workplace. This can take the form of any employee who fails to complete tasks delegated to them, instead imposing additional work on colleagues. Without repercussions for such a worker, this can become a common practice.
Initially, the free rider problem may not present any problems. After all, a shared resource may still be accessible and enjoyable to all regardless of rising maintenance expenses. However, costs might grow or accumulate over time. This increases the total cost of providing and maintaining a shared resource in the first place. Eventually, the resource may cease to be available should the costs become excessive.
The free rider problem is the burden imposed on a community when a shared resource deteriorates due to overuse by individuals who are not contributing to its maintenance or upkeep.
It occurs when there are resources that anyone can use, that no one can limit, and that cost something to produce or maintain. The free rider problem can crop up in various settings, such as public facilities, free media, and the environment.
