private goods, which are excludable and rivalrous, so that no one but the inventor can use them during the

length of the patent.

The Free Rider Problem of Public Goods

Private companies find it difficult to produce public goods. If a good or service is nonexcludable, like national

defense, so that it is impossible or very costly to exclude people from using this good or service, then how can a

firm charge people for it?

LINK IT UP

Visit this website (http://openstax.org/l/freerider) to read about a connection between free riders and “bad

music.”

When individuals make decisions about buying a public good, a free rider problem can arise, in which people

have an incentive to let others pay for the public good and then to “free ride” on the purchases of others. We

can express the free rider problem in terms of the prisoner’s dilemma game, which we discussed as a

representation of oligopoly in Monopolistic Competition and Oligopoly.
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