Free Riding without Dead Weight Losses

Abstract

Traditional economic theory assumes that dead weight loss due to free riding on public goods is inevitable. This study demonstrates that free riding without dead weight losses can theoretically exist through Bowen’s model. To this end, this study uses the consumer surplus analysis to present the conditions for free-riding that do not involve dead weight losses, as well as to demonstrate that policy choices that satisfy both the value of efficiency and equity in the supply of public goods are possible. This article formularizes the conditions under which such exceptional cases occur and examines what policy implications the presence of such conditions have in making decisions about the provision of public goods. The discussion of possibility and conditions for free-riding without dead weight losses is significant in that it suggests theoretical and policy implications for policies to raise equity as another important value, not just providing a solution to market failure.