Question

In order to overcome the ________ problem, interest groups often provide ________ to their members. free-rider; collective goods free-rider; selective benefits principal-agent; collective goods principal-agent; selective benefits

Answer 1

The selective benefits are regarded as benefits given only to group members. In order to overcome the free-rider problem, many interest groups offer selective benefits.

• The free-rider problem is often known as a type of market failure. It takes place when individuals who benefit from resources, public goods or services of a benefit to all nature do not pay for them or they under pay.

They are problem because they do not pay for the goods but still continue to access or use it.

This problem in social science deals with how to limit free riding and its negative effects in the society.

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