Question

A common solution to the free-rider problem is: (Check all that apply.)

	For government to provide the good and pay for its production through taxation
	For government to subsidize consumption of the good
	For government to provide vouchers to consumers of the good
	To use the Coase theorem to determine who has the property rights to the good in question

Answer 1

• Option A is the applicable solution.
• A common solution for free rider problem is, for the government to provide the good and pay for its production through taxation.
• Free rider problem is enjoying the public goods for free and the payment is often made by others. Applying a proper taxation scheme will prevent this situation to some extend.
• While free riders are enjoying the public goods, government have to suffer from loss. By monitoring the free riders and imposing taxes are the best solution for this situation.