Mixed provision and the free-rider problem
| English | 中文 | Pinyin |
|---|---|---|
| free rider/friː ˈraɪdə/ | 搭便车者 | dā biàn chē zhě |
| non-rivalry/nɒn ˈraɪvəlri/ | 非竞争性 | fēi jìng zhēng xìng |
A decision you can investigate
- A city provides street lighting and sells bus tickets. A private company repairs bicycles.
- Who owns a service and whether it is a public good are different questions.
Build the explanation
- In a mixed economy, prices and private decisions allocate some resources while government ownership, spending and rules allocate others. Public-sector ownership and private-sector ownership differ in control and aims.
- A public good is non-rival and non-excludable: one person’s use does not reduce another’s, and it is difficult to exclude non-payers. Free riders can weaken the private incentive to fund provision.
Work through the evidence
- A pedestrian benefits from an operating street light without paying separately; another pedestrian can benefit at the same time. A bus seat is different: a ticket can exclude non-payers and a full seat cannot serve another passenger simultaneously.
- Privatizing a publicly owned bus company changes ownership, not automatically competition. In fictional economy A, 20 of 100 workers have public-sector jobs; in B, 40 of 100 do. Public employment shares are 20% and 40%, showing different sector importance on that measure.
Which statement separates ownership and public-good status correctly?
Contractor ownership does not change the light’s consumption characteristics.
Test the limits
- Free of charge is not the same as a public good: a free clinic appointment still uses limited staff time. Public provision can finance a public good, even when a private contractor installs it.
- Privatization may improve incentives but can affect fares, access, jobs and public finances. Evaluate regulation and competition rather than assuming ownership alone determines performance.
Privatization means
Ownership changes; market structure and regulation need separate evidence.
A government can finance a public good and employ a private contractor to provide it.
Financing, ownership of the contractor and consumption characteristics are distinct.
Apply and explain your answer
- Why is a ticketed bus service not a pure public good?
- It is excludable through tickets and rival when seats are scarce.
Which is a relevant privatization evaluation question?
Compare incentives, competition and stakeholder effects in context.
Use the terms precisely
- non-rivalry 非竞争性: One person’s use does not reduce the amount available to others.
- free rider 搭便车者: A person benefiting from a good without contributing to its funding.
Match the terms to their meanings.
Each term describes a specific mechanism in this lesson.
A pedestrian benefits from an operating street light without paying separately; another pedestrian can benefit at the same time. A bus seat is different: a ticket can exclude non-payers and a full seat cannot serve another passenger simultaneously. Privatizing a publicly owned bus company changes ownership, not automatically competition. In fictional economy A, 20 of 100 workers have public-sector jobs; in B, 40 of 100 do. Public employment shares are 20% and 40%, showing different sector importance on that measure.
Free of charge is not the same as a public good: a free clinic appointment still uses limited staff time. Public provision can finance a public good, even when a private contractor installs it. Privatization may improve incentives but can affect fares, access, jobs and public finances. Evaluate regulation and competition rather than assuming ownership alone determines performance.
In a mixed economy, prices and private decisions allocate some resources while government ownership, spending and rules allocate others. Public-sector ownership and private-sector ownership differ in control and aims.