The Free Rider Problem
Individual members of the group can benefit from efforts made by other members. In the case of developing a township park, few members participate in maintaining the park but it is utilized by many people, inclusive of those who do not maintain the park. The free riders are viewed as individuals who consume resources freely without any form of payment or by offering minimal contributions. Free riding is considered an economic problem because it contributes to the under-production of public utilities (Altrichter, 2007). Use of common property resources such as Township Park freely can lead to Pareto inefficiency. Thus, the park issue can be compared with a group project in an economic class, regarding members who act as free riders by offering no contributions to a given assignment.
One similarity is that in both the park and the class project, many people do not participate in the necessitated requirements yet they enjoy gains accruing from efforts made by others. For instance, the park was developed by a group of citizens and maintained by some local citizens but non-local participants utilize it and yet they do not participate in maintaining or developing it. This is similar to the economics class project. Concerning the group project, many students refrain from participating in terms of information compilation and printing owing to various reasons yet upon the project submission, all individuals are awarded same marks. Thus, both the park and class project act as public goods, which are consumed by any individual in need of public utility.
Another similarity is that both the park and class project have jointness of supply and nonrivalness consumption (Batina and Ihori, 2005). Nonrivalness means that an individual’s consumption does not or is not affect another person’s consumption. With regard to supply, the park and class projects are like goods, which once made available to one person, they can be consumed by others without an inclusion of an additional marginal cost. This situation is termed as nonrivalness consumption. Batina and Ihori (2005) point out that in standard price theory, the price for commodities tends to be equal to marginal cost thus such goods mainly have zero price. This can be equated with the park and class project because free riders enjoy free services and utility as provided by others without paying or participating in anything.
A notable difference between the park and the class project is that with the class project, incase an individual fails to accord the required participation other students are able to report the issue to the instructor. The teacher may then reprimand the affected student accordingly. This cannot be included in the park project, since every individual bears the right of usage by the fact that it is a public recreational project. In the class project, there are motivational ways affecting the group members in achieving their self-interest. Consequently, the students have to merge their interests because lack of cooperation leads to poor results in the project work (Altrichter, 2007). Freedom arises from participating in decision making because it enables the learners to gain self-control over their lives.
In case of the park, all users have their different needs within the given location and all acts as independent players. Additionally, the park is a public utility, which is provided by the government with taxes levied for support purposes. However, free riders may evade such taxes in order to enjoy free services creating an economic problem such as underdevelopment. Moreover, even if public goods have some features that make them problematic in practice, there is the impossibility of exclusion. Once such goods are supplied, it is impossible to exclude any individual from consuming the same. Thus, those who do not pay for the services cannot be excluded from the park unless strict policies are imposed as noted in the class project.
Incentives that may be used in solving both problems include motivating members towards participation especially in executing or maintaining the project work. Students failing to comply should be motivated by negative factors like being given a fail on the project. With regard to the park issue, rules or policies of taxation should be employed to enable everyone consumers in avoiding the free rider problem and subsequently under production. The policies should be monitor self-actions in order to enable every one to participate towards achieving developmental goals.
References
Altrichter, C. (2007). Experimental Evidence on the Free Rider Problem. Muchen, Germany:
GRIN Verlag.
Batina, R. G., & Ihori, T. (2005). Public goods: Theories and evidence. Berlin, Germany: Springer-Verlag Berlin and Heidelberg GmbH & Co. KG.
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