Public goods dilemma

The public goods dilemma is a concept in economic theory that arises when individuals face a decision to contribute towards a public good or to free-ride on the contributions of others. A public good is a good or service that is non-excludable, meaning that it is available to everyone, and non-rivalrous, meaning that one person's consumption does not reduce its availability to others.

In the context of the public goods dilemma, individuals have an incentive to free-ride because they can benefit from the public good without having to contribute towards its provision. Since they cannot be excluded from enjoying the good once it is provided, they may choose not to contribute their fair share.

This dilemma leads to a potential under-provision of public goods because if everyone acts in their own self-interest and refuses to contribute, the good may not be provided at all. However, if enough individuals do contribute, the public good can be made available to all.

Various mechanisms have been proposed to overcome the public goods dilemma, including government intervention through taxation and provision of public goods, as well as voluntary contributions and cooperative behavior. Additionally, social norms, reputation, and reciprocity can play a role in promoting cooperation and contributions towards public goods provision.