# Tag Info

11

I would also add to @afreelunch's answer that not all free riders play the exact same role in every situation. In the example cited by him about street lights, it is quite obvious that people there could get an extra profit thanks to those lights. But if they do not buy them, nobody will lose anything (except the opportunity of having that extra profit). ...

10

It's called a Principal-Agent Conflict. The RIAA/MPAA act as agents on behalf of the people who actually produce content (and consequently end-consumer value). To maintain relevance to their principals', the RIAA/MPAA must signal value to them (i.e. claim loudly and repeatedly that they do something good for them [regardless of the validity of that claim]). ...

7

The simple answer is that they don't think they would make as much money. In many countries illegally downloading music or movies is getting harder and harder. The recording industry has achieved this by persuading governments to instruct the ISPs to block torrent sites, torrent proxy sites and sites that list proxy sites completely so no one can access ...

6

The existing answers are covering mostly only situations where the 'free riders' aren't using up anything. It's important to note that an emergency room is absolutely not such an example. Someone who is not paying for an emergency room visit is using up someone else's resources without compensating them. They are taking up an ER room that could be used by ...

5

What I don't see here is an economic model, however rudimentary, that will allow us not to definitely answer the question but to clarify what are the critical issues. So here's one (totally rudimentary): Consider a work of digitized and mass-commercialized content $x$, like a song, a movie, or a book. Assume that in the short run, demand (desire) for it is ...

4

A good is excludable if people can be prevented from using it. If one person is using any rival good then this good won't be available for others. You asked about rival and non-excludable good such as Common-pool resources. Examples of Common-pool resources is fisheries, forests, groundwater basins, oil fields and so on. Unlike pure public goods, common pool ...

3

The model is a variant on penetration pricing (effectively $0 for pirates) which is used to gain market share. The problem is while monopoly may be desirable, the path to monopoly is generally not, as the cost to acquire market share rises relative to the value of each additional unit of market share. While there is no specific study of Adobe that I know ... 2 Background Since the marginal cost of distribution for a creative work such as a song is now essentially zero, the efficient thing to do would be to provide all songs to listeners at a price of zero (i.e. to allow piracy). However, this neglects the fact that producing creative works involves a fixed up-front cost (e.g. studio recording time, or simply the ... 2 I know of at least one paper that deals with exactly this issue. Shy & Thisse (2004): "A Strategic Approach to Software Protection", Journal of Economics and Management Strategy, 8(2). The link above is to the (paywalled) published version. An ungated version is on the author's website here. Here's the abstract: This paper demonstrates that there ... 2 I will only address e-books (and other text), and discuss the technical issues. These technical issues make e-books distinct from other electronic media. An e-book is a compressed file that contains what are essentially web pages (each a “chapter”), with meta-data in XML. Typical size is small (a couple megabytes), with size possibly increasing due to images ... 2 This may not be exactly what you're looking for, but your question reminds me of the work of Elinor Ostrom, who (along with Oliver Williamson) won the Nobel in Economics for her work on what academics in the field call 'the commons'. Here's a good place to start reading about her work. Check under 'Popular Information' and 'Advanced Information' in ... 2 It is a "problem" because if no one pays for the good or service (they are 'free' riding after all), sellers of that product have no incentive to produce it. If no one produces it, and the good or service is beneficial (e.g. national defense), then surely that is a "problem"? I don't think anyone wants to live in a country with no national defense. The same ... 2 Surprisingly no one has mentioned the tragedy of the commons. Having been born in the Soviet Union where everything was public and everyone was a free rider, I used to call it the tragedy of my life. But anecdotes aside, the problem with free riders is if they are allowed, eventually everyone becomes a free rider. Eventually, such a place deteriorates into, ... 2 There are other aspects, which (I think) has not been mentioned by other answers. If people have the choice to pay for something, or to be a free rider, almost everyone will choose to be a free rider. If everyone pays their fair share (for some definition of "fair share") of the cost of road building & maintenance, and the roads get built, then everyone ... 1 Putting my comment into a short answer, rivalry can in some sense exacerbate the problem of free riding. In a free-riding problem, it is not possible to exclude non-payers from consumption, which results in overconsumption and underprovision of the good. This is a issue for public goods, which are non-excludable and non-rival. It is even more of an issue, in ... 1 To continue the example of the street performer: Suppose there are two people offering the performer money, but in exchange they want her to perform different songs. Person A prefers song A while person B prefers song B. Whoever offers the higher sum gets their wish. In this case there is rivalry between the consumers. Yet there is also non-excludability: ... 1 If I understand correctly, the claim is is: Proposition: Take a budget as given, and consider a world with two goods,$A$and$B$. In the first scenario, the price of$A$is positive, and the household spends$E_A$on$A$, and nothing on$B$. In a second scenario, the price of$A$is zero.The household will now spend the same amount$E_A$on$B\$. How did ...