Wikipedia and the free rider problem

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Has anyone else noticed the banner at the top of the page on Wikipedia?New Picture (2)

And does anyone know why I care enough to spend the time to write about it?

Wikipedia is one of the world’s most popular websites, being ranked #6 by Alexa.  That’s a lot of traffic being driven to the site and we all know that websites cost money to operate especially when they serve as many people as Wikipedia does.  They run on hardware—hardware that needs to be stored, cooled, maintained, etc.  And then there are all the people who need to work to run the actual site.  It can get expensive.  Wikipedia has to get its money from somewhere, so how does it do it?

As the statement above says, they don’t want to use ads.  And they don’t take government funds.  No one, of course, has ever had to pay a user fee to access the site.  Wikipedia gets its money from donations.  It’s not a charity, but some people who use the site say to themselves, “You know, I really like this site and find it useful, so why don’t I send them some money to make sure it stays up.”

I don’t think the majority of people, however, actually ever donate to Wikipedia.  I know I never have and I use the website a lot.  So you could say that I’m a “free rider.”  Hmmm, I think I’ve heard of this term before…

People will bring up the “free rider problem” when arguing against the privatization of any number of government services, whether it be the police, fire protection, roads, the military, or whatever else the topic may be.  They claim that if you don’t have to pay, no one would.  So a business model for private security forces that used funds from wealthier customers to help cover the costs to serve poorer clients simply could not work in their view.  The people actually paying the bills would say, “Hey, if I stop paying, there are still plenty of other people who will continue to pay.  And anyway, why should that guy get something for free?”  With everyone having this feeling, the market collapses.

The problem with the free rider problem is that it ignores that those who pay for the goods or services believe they will benefit more than if they received the free version.  They consider their money to be well spent.

What makes Wikipedia such a shining example of voluntary transactions is that it survives despite all of the free riders latched on.  Furthermore, it does it with a system that doesn’t even actually offer any additional benefits (at least as far as I know) for those who have donated money.  If it works so well with a luxury like Wikipedia, imagine the success we’d have in society if we allowed other markets to operate as freely.

If free riders are such a big problem, why is Wikipedia such a strong site?

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Stephan Livera
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Reblogged this on Peace and Markets and commented:
Great post, I particularly like this line: “If free riders are such a big problem, why is Wikipedia such a strong site?”

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