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Economics

The Economics of Public Goods and Free-Rider Problems

Quick fact

National defense is a classic public good: if one person is protected from invasion, everyone else is too, and it's impossible (or incredibly costly) to exclude those who don't pay taxes. This inherent non-excludability leads private markets to provide almost none of it—the free-rider problem—which is why governments typically supply it.

Why this is interesting

Imagine everyone in your apartment building hoping someone else pays for the hallway light bulb—so no one does, and you're all left in the dark. Why do we so often fail to cooperate for our common benefit?