The free-rider problem occurs when people who consume resources, public goods and shared resources do not pay for them. This is a big challenge for communities to produce goods, services and resources that benefit everyone. Those that do not pay become a burden on the small group that does and could prevent the entire society from reaping benefits.
For example, a community may build a lighthouse that is beneficial to all sailors that pass by its coast. However, the lighthouse owner does not get any profits from its use. The lighthouse is a public good. Other examples are public libraries, parks and other communal resources that are non-exclusive and non-rivalrous. The problem arises because they are impossible to stop non-contributors from consuming these resources.
This leads to overconsumption that may lead to the depletion or destruction of the resource. This is the principle behind the theory of the tragedy of the commons.
In an attempt to counter this, a variety of mechanisms have been developed to solve the free rider problem, including mandatory contributions, rewards, education and enforcement. However, the issue persists and needs to be addressed in different ways based on the context.
Some solutions to the free-rider problem include limiting access to certain goods or services, such as restricting them to a specific area, charging pay-per-service or providing only a certain percentage of citizens with access to these resources. Rewarding the consumption of these resources is also a good way to motivate consumers and discourage free riders. This may involve a system of tax deductions, credits or discounts on other products/services that are used to offset consumption and promote paying for the good or service.