Presentation is loading. Please wait.

Presentation is loading. Please wait.

Lectures in Microeconomics-Charles W. Upton The Free Rider.

Similar presentations


Presentation on theme: "Lectures in Microeconomics-Charles W. Upton The Free Rider."— Presentation transcript:

1 Lectures in Microeconomics-Charles W. Upton The Free Rider

2 Examples of Free Riders Someone who sneaks into a concert, baseball game or the like without paying admission.

3 The Free Rider Examples of Free Riders Someone who sneaks into a concert, baseball game or the like without paying admission. A member of a club who goes to all club events without contributing to the club's annual fund drive or, even worse, not helping to clean up the mess after each party.

4 The Free Rider Examples of Free Riders Someone who sneaks into a concert, baseball game or the like without paying admission. A member of a club who goes to all club events without contributing to the club's annual fund drive or, even worse, not helping to clean up the mess after each party. Someone who markets a new product without paying royalties.

5 The Free Rider Why are Free Riders a Problem? Suppose you believe you can develop a better mousetrap. All it will take is a year's work on your part.

6 The Free Rider Why are Free Riders a Problem? Suppose you believe you can develop a better mousetrap. All it will take is a year's work on your part. Suppose other firms will copy your design. They are free riders.

7 The Free Rider Why are Free Riders a Problem? Suppose you believe you can develop a better mousetrap. All it will take is a year's work on your part. Suppose other firms will copy your design. They are free riders. Why spend a year producing the better mousetrap?

8 The Free Rider Exclusive Sales Territories You are managing a large sales force on commission.

9 The Free Rider Exclusive Sales Territories You are managing a large sales force on commission. Slick Willie posts a sign on the web saying "I'll share my commission with you, just e- mail me your order."

10 The Free Rider Exclusive Sales Territories You are managing a large sales force on commission. Slick Willie posts a sign on the web saying "I'll share my commission with you, just e- mail me your order." Customers who ask Slick Willie questions are told "just send me the order".

11 The Free Rider Exclusive Sales Territories You are managing a large sales force on commission’ Slick Willie posts a sign on the web saying "I'll share my commission with you, just e- mail me your order." Customers who ask Slick Willie questions are told "just send me the order". Customers get the product info from other sales representatives, then go to Slick Willie for the best price.

12 The Free Rider Exclusive Sales Territories Slick Willie is a free rider.

13 The Free Rider Exclusive Sales Territories Slick Willie is a free rider. The other members of your sales force will quickly adopt Slick Willie's tactics or they will die.

14 The Free Rider Exclusive Sales Territories Slick Willie is a free rider. The other members of your sales force will quickly adopt Slick Willie's tactics or they will die. And so might you, for without a sales force promoting your product, your sales may well plummet.

15 The Free Rider Why GM Rations Dealers One dealer came up with the idea of cutting service to the bone and then advertising new GM cars slightly above wholesale.

16 The Free Rider Why GM Rations Dealers One dealer came up with the idea of cutting service to the bone and then advertising new GM cars slightly above wholesale. GM quickly forced him out of business by simply restricting deliveries of new cars.

17 The Free Rider End ©2004 Charles W. Upton


Download ppt "Lectures in Microeconomics-Charles W. Upton The Free Rider."

Similar presentations


Ads by Google