This article is about an economic and political phenomenon. For the stock market term, see Free riding. For free rides on freight trains, see Freighthopping. For free rides on any type of vehicle, see Stowaway.
A free rider, in economics, refers to someone who benefits from resources, goods, or services without paying for the cost of the benefit. The term "free rider" was first used in economic theory of public goods, but similar concepts have been applied in to other contexts, including collective bargaining, antitrust law, psychology and political science.[citation needed] Free riding may be considered as a free rider problem when it leads to under-provision of goods or services, or when it leads to overuse or degradation of a common property resource.[1] One major problem and reason why free riders often occur is when property rights are not clearly defined and imposed.[2] An opposite concept is that of a forced rider.
Although the term originated in economic theory, similar concepts have been cited in political science, social psychology, and other disciplines. 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.[3] The government is the primary source societies address to avoid the free rider problem. Regulation is another form of action taken by governments to resolve free rider problems to prevent environmental degradation or excessive resource use. If too many people start to free ride, the system will soon not have enough money to operate.[4]
In a labor union, free riding occurs if an employee pays no union dues or agency shop fees, but benefits from union representation. A frequently used example of the free rider problem occurs in the United States’ national defense. Every citizen benefits from being protected; however, individuals who avoid paying their taxes are still being protected by the same common resource of protection, even when they did not pay for their fair share. The non-tax payer therefore profits from a stock trade without using any of his or her own capital.[5]
Cornes, Richard; Sandler, Todd (1986). The Theory of Externalities, Public Goods and Club Goods. New York: Cambridge University Press. ISBN052130184X.
Venugopal, Joshi (2005). "Drug imports: the free-rider paradox". Express Pharma Pulse11 (9): 8. This article refers to the free-rider problem in global pharmaceutical research.
