What is Free Rider Problem?

Free rider problem indicates a situation where an individual or groups not paying a tax or contributing anything in return for the goods or resources or services they availed.

An example for free rider is someone who does not pay his or her share of taxes after benefiting from roads, water treatment plants, free education etc. Free rider problem is thus associated with the consumption of public goods.

Excess consumption of a public good when the people who have the ability to pay for it, especially by paying taxes may lead to the non-production or under-production of a public good.

The free rider problem also arises when an individual consumes more than his fair share of a public good provided by the government like drinking water.