Examples of life problems in traditional economics

Free-rider phenomenon in economics, citing examples in life as follows:

For example, many shipping companies refuse to build lighthouses, and they can get the same service. This hitchhiking problem will affect the smooth formulation and effective implementation of public policies. The high welfare policies of European countries are also examples of hitchhiking. The high taxes paid by high-income earners are "hitchhiked" by low-tax payers who also enjoy high benefits.

Extended data

A system to overcome the hitchhiking problem;

First of all, due to the non-exclusiveness and non-competitiveness of public goods, the market is inefficient in the supply of public goods. Therefore, the supply of public goods is mainly provided by the government, but also private. Providing public goods by the government does not mean that the government produces all public goods, but only the government produces and manages public goods.

For various reasons, its efficiency is usually very low. Therefore, the function of the government should be to provide public goods, not to produce them. Especially for public goods, the government often arranges the production of enterprises or even private enterprises through budgets or policies. The government can also encourage the production of public goods by subsidizing enterprises that produce public goods.