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The "Free Rider" problem


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#1 mcurtiss

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Posted August 20 2012 - 07:44 AM

I think we can all agree that in the healthcare arena, the "free rider" is problem that adds to the overall cost of healthcare. "Obamacare" at least attempts to solve this problem (which is why I think the Heritage Foundation initially endorsed the individual mandate).

Assuming the "free rider" is a problem (and I think it is) , are there any free market solutions? for example, penalizing those who attempt to free ride (but doesn't that fly in the face of EMTALA)?
"I'm not talkin' 'bout pleasure boatin'. I'm not talkin' 'bout day sailin'. I'm talkin' 'bout workin' for a livin'. I'm talkin' 'bout shahkin'!"

#2 mcurtiss

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Posted August 20 2012 - 08:30 AM

here's one libertarian theory....

http://mises.org/daily/2769/


Those who advocate government provision of goods or other coercive measures as the solution to the "problem" of free riding frequently suffer from a lack of imagination in considering entrepreneurial solutions. In fact, there are plenty of ways in which entrepreneurial activity may allow the parties to arrange their affairs to take advantage of Pareto-efficient gains. Our beekeeper may enter into an assurance contract with his neighbors, whereby he agrees to purchase the bees — or purchase more bees — only if they will pay him some of the cost. He may decide to buy out his free riding neighbors if he feels that the benefit he is about to provide to their property makes it a good deal. Or he may think of some other idea for a voluntary agreement. And of course, it may even be that there is no way to achieve a Pareto-efficient gain due to high transaction costs, or some other reason.

Thus, although the "problem" of free riding does indeed identify situations that involve the potential for further gains, it most certainly does not follow that government provision of goods or other coercive arrangements will improve the situation. Those who advocate coercive arrangements to obtain Pareto efficiency gains are forced to ignore the revealed preferences of the people involved, and thereby commit a fundamental economic error. By arguing for coercion as a means of solving the "problem" of positive externalities, they elevate the policy of forced payment for unsolicited goods to the status of an economic ideal. This is surely one of the most conspicuously tyrannical arguments in modern economics.


"I'm not talkin' 'bout pleasure boatin'. I'm not talkin' 'bout day sailin'. I'm talkin' 'bout workin' for a livin'. I'm talkin' 'bout shahkin'!"

#3 Little

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Posted August 20 2012 - 09:11 AM


Quote:


By arguing for coercion as a means of solving the "problem" of positive externalities, they elevate the policy of forced payment for unsolicited goods to the status of an economic ideal. This is surely one of the most conspicuously tyrannical arguments in modern economics.



Whoops.



#4 mcurtiss

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Posted August 20 2012 - 09:16 AM

so then is there a "solution"?

I say repeal EMTALA. done, and did. and there was peace in the valley.
"I'm not talkin' 'bout pleasure boatin'. I'm not talkin' 'bout day sailin'. I'm talkin' 'bout workin' for a livin'. I'm talkin' 'bout shahkin'!"

#5 hamlet

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Posted August 20 2012 - 09:28 AM

As with most markets, part of high costs is limited supply.
The AMA limits the number of doctors competing to provide services.

I rarely hear discussions of the economic impact of adding docs to the work force.

I do hear how BarryCare and other government schemes force docs OUT.

I have always thought we could use a two tier system... want "free" care? Want no insurance? Ok then you can use the network of Carribean trained docs. Like illegal alien lawn service, only medical.

Have insurance? Or paying for care? Ok, then here's a market with plenty of docs competing for your dollars.

Also, insurance should put the customer into the payment loop. Spend the dollars wisely. Maybe something like if you find care under some cost level, we kick back some premium next year as an economic reward.

I won't tolerate your intolerance, because I hate hate.


#6 Little

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Posted August 20 2012 - 09:39 AM


Quote:

Originally Posted by mcurtiss View Post



so then is there a "solution"?

I say repeal EMTALA. done, and did. and there was peace in the valley.





A start.