Here is a little local example of free riding and the intuitions that it generates:

A group of young professionals in my town organized a street party last Friday evening, arranging to close the boulevard that runs through the central business district, hiring a band to perform on an outdoor stage, and selling beer.  The beer was contributed by one of the event’s sponsors; proceeds of the beer sales were donated to a local charity.  The event was a smashing success.  Thousands of people showed up and had a good time, and a lot of money was raised for the charity.

Owners of the local businesses on the boulevard saw a good thing coming, and many of them stayed open beyond their ordinary hours to cater to the crowd.  Several of them are bars and/or restaurants; much beer was sold by them.  Some are art galleries and clothing stores.  Like all of the local businesses, they kept the proceeds.  None donated to the charity.  One local bar hired a band that performed inside the bar.

All of the local businesses in this scenario are free riders, a term that I use purely descriptively.  Many of them agreed to post publicity flyers about the event, but they otherwise did not help to plan or publicize the event, and they didn’t underwrite any of it.

Local reaction to the free-riding-bar-with-the-band has been mixed.  Some local citizens, especially those with special sympathies for the charity in question, believe that the bar was engaged in a kind of unfair competition and should return some share of Friday evening’s profits to the charity.  Others disagree.  They liken the bar to the rest-of-the-free-riding-businesses, which are uniformly regarded as rightly engaging in the kind of opportunistic competition that made this country great.  My point, below the jump.Read More »Free Riding