Which of the following is NOT an effect of the free rider problem or the tragedy of the commons?

• A. Efficient allocation of resources through market prices
• B. Under-provision of public goods due to lack of individual incentives
• C. Overuse of common resources leading to depletion
• D. Difficulty in excluding individuals from benefiting without paying

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the free rider problem and the tragedy of the commons. The free rider problem occurs when individuals consume a good without paying for it, leading to under-provision of public goods. The tragedy of the commons happens when common resources are overused because individuals do not bear the full cost of their consumption.
2. Step 2: Identify the typical effects of these problems. For the free rider problem, a common effect is the under-provision of public goods due to lack of individual incentives to pay. For the tragedy of the commons, the typical effect is overuse and depletion of common resources.
3. Step 3: Recognize that both problems involve difficulty in excluding individuals from benefiting without paying, which leads to inefficiencies in resource allocation.
4. Step 4: Analyze the option 'Efficient allocation of resources through market prices.' Since both the free rider problem and the tragedy of the commons cause market failures, they prevent efficient allocation of resources through market prices.
5. Step 5: Conclude that the option 'Efficient allocation of resources through market prices' is NOT an effect of the free rider problem or the tragedy of the commons, as these problems cause inefficiencies rather than efficiency.