Question

Explain how a free rider may arise on a public good and describe the consequences of the free-rider problem.

Answer 1

Public goods in the market are non rival and non excludable, so, if the consumer consuming the goods cannot be removed from the market irrelevant of the fact that they pay or not, this is the reason why there is a free rider problem in the public goods market.

The main consequences of free rider problem is that; this problem doesn't allow the private firms in the market to function effectively and they have to given for the government to intervene in the market or there will be a deadweight loss in the market.