Free rider problem
.

Home ] Up ] Definition of benefit cost analysis ] Assumptions ] Data ] Externalities ] Evaluating nonmarket externalities ] Discount rates ] [ Free rider problem ] Ranking projects ] Conclusion ]

The free rider problem occurs when those paying for use of a resource do not have exclusive use of the resource and property rights cannot be protected. Classical biological control provides an example of the free rider problem: biological control agents supplied may rapidly spread onto adjoining properties, so that eventually everyone will receive the biological control agent, whether they want it or not.  Since the free riders and those who want the biological control agent sufficiently to pay for it all receive the benefits of the agent, it may be difficult to charge for using the biological control agent.

The free rider problem can discriminate against classical biological control projects because there may be no realised (monetary) benefit from investment in research into biological control.

Back ] Next ]

David Adamson