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How do public television stations, like PBS, try to overcome the free rider problem?
Externality is impact on the third-party who is not related to the transaction but is effect by thattransaction happening between two parties. A positive externality spreads the benefit to others aswell like innovation, etc. Public goods are those goods which are both non-rival andnonexcludable.There are some public goods like radio, and public television broadcast which are public goodsbut they do not need to worry about collecting revenue from customers, instead they have analternate revenue stream where they collect revenue from advertisement. This revenue streamhelps them getting over the free rider problem because they now are happy as more and morepeople see their programs, more they earn.
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Chapter 13
Positive Externalities and Public Goods
Markets and Welfare
The Economics of the Public Sector
Aaron C.
July 4, 2021
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There are multiple ways that public programming like PBS can use to try to overcome the free rider problem, the probably the simplest of which would just be taxation. So if everyone has to pay a tax, whether they use the service or not, then there can be no free riders. However, then you also run into the problem of people paying for the service to warn, actually using it. So perhaps another way to do it would be advertising. And if you use advertising than the people who are receiving the benefits are also sitting there watching the commercials and they're having to sit through those commercials that's imposing, it cost upon them. And it's the money from that advertising that can pay for the public good.
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