Question

Define and explain the difference between the terms “nonrival” and “nonexcludable.” Which of these properties is likely to result in a free-rider problem?

Answer 1

Non rival : A good can be termed as non rival when using it does not reduce the utility of the good for other consumers, for example police service, no matter how many people are there is the society, they all will receive the same benefit from the police working,

Non excludable: It means that a person cannot be excluded from using the service, like a national radio. every one can switch on to it and enjoy the songs etc. No one can exclude anyone from using the radio service.

the free rider problem i..e a person using the service and not paying for it will occur in non excludable goods because even if the person is not paying for the goods we cannot exclude them for example the person enjoying a clean beach but not paying the fee for cleaning it.