Key problem for everyone, whether they be trade unionists, business associations, ‘non-hierarchical’ organisations – how to make sure people don’t just loaf and get the collective benefits that will accrue from other folks’ hard work, risk and sacrifice. Common pool resources need to be protected from this sort of behaviour… See also Externality, positive
In economics, the free rider problem occurs when those who benefit from resources, goods, or services do not pay for them, which results in an under-provision of those goods or services. The free rider problem is the question of how to limit free riding and its negative effects in these situations. The free rider problem may occur when property rights are not clearly defined and imposed. An opposite concept is that of a forced rider.
The free rider problem is common among public goods. These are goods that have two characteristics: non-excludability—non-paying consumers cannot be prevented from using it—and non-rivalry—when you consume the good, it does not reduce the amount available to others. The potential for free riding exists when people are asked to voluntarily pay for a public good.
Although the term “free rider” was first used in economic theory of public goods, similar concepts have been applied to other contexts, including collective bargaining, antitrust law, psychology and political science.For example, some individuals in a team or community may reduce their contributions or performance if they believe that one or more other members of the group may free ride. In a labor union, free riding occurs if an employee pays no union dues or agency shop fees, but benefits from union representation. One free rides to profit from a stock trade without actually using any of his or her own capital. A common example of a free rider problem is defense spending. No one person can be excluded from being defended by a state’s military forces, and thus free riders may refuse or avoid paying for being defended, even though they are still as well guarded as those who contribute to the state’s efforts.