In economics, the concept describes an individual or entity that benefits from a good or service without contributing to its cost. This behavior often occurs when a good is non-excludable, meaning it’s impossible to prevent someone from using it, and non-rivalrous, meaning one person’s use doesn’t diminish its availability to others. A classic example is public broadcasting: individuals can listen to the radio signal without paying a subscription fee, potentially undermining the funding model.
This behavior poses a significant challenge to the efficient provision of public goods and services. If too many actors choose to benefit without contributing, the good may be under-provided or not provided at all, leading to a suboptimal outcome for society. The understanding of this phenomenon has been crucial in shaping government policies regarding taxation, public goods provision, and intellectual property rights, impacting areas like national defense, environmental protection, and basic research.
