How does the principle of minimum differentiation relate to the free-rider problem?
What will be an ideal response?
The free-rider problem requires that the government intervene so that an efficient level of a public good is produced. Often the government itself provides the public good. In this case, politicians are the government officials that are responsible for deciding which and what amounts of public goods are produced. In order to collect the most votes, politicians choose policies proposing the provision of certain public goods that are similar to competing politicians. The tendency for competitors to choose similar policies is the principle of minimum differentiation. In this case, the principle of minimum differentiation means that political parties propose to produce similar quantities of public goods because these proposals attract the maximum number of votes.
You might also like to view...
An individual who is only willing to pay a relatively low amount for a particular good
A) would fall in the upper portion of the demand curve. B) would fall in the middle portion of the demand curve. C) would fall in the lower portion of the demand curve. D) would not be considered part of the demand curve.
Suppose a six-sided dice is rolled twice. The probability of getting a five during the second roll will depend on the outcome of the first roll
Indicate whether the statement is true or false