How could a local government overcome the free rider problem with respect to providing street lights?
A)by requiring residents to pay taxes to pay for the lights
B)by asking residents to donate money to pay for the lights
C)by forming a trade association to lobby the state legislature
D)by forming a public sector interest group to lobby the state legislature

Question

Quizplus · Accepted Answer

Requiring residents to pay taxes to pay for the lights ensures that everyone who benefits from the street lights contributes to its cost, thus avoiding the free rider problem. This is because taxes are mandatory and non-contributory, which means everyone is required to pay their fair share. Asking residents to donate money (B) would lead to the free rider problem as some residents may choose not to contribute. Forming a trade association (C) or public sector interest group (D) may help advocate for the provision of street lights, but neither solves the free rider problem.

How Could a Local Government Overcome the Free Rider Problem