Editing Free-rider problem (section)

=== Coasian solution ===
A [[Coasian solution]], named for the economist [[Ronald Coase]], proposes that potential beneficiaries of a public good can negotiate to pool their resources and create it, based on each party's self-interested willingness to pay. His treatise, ''[[The Problem of Social Cost]]'' (1960), argued that if the [[transaction cost]]s between potential beneficiaries of a public good are low—that it is easy for potential beneficiaries to find each other and organize pooling their resources based upon the good's value to each of them—that public goods could be produced without government action.<ref name=Coase1960>{{cite journal |last=Coase |first=Ronald |journal=Journal of Law and Economics |date=October 1960 |volume=3 |pages=1–44 |doi=10.1086/466560 |title=The Problem of Social Cost|s2cid=222331226 }}</ref>

Much later, Coase himself wrote that while what had become known as the Coase Theorem had explored the implications of zero-transaction costs, he had actually intended to use this construct as a stepping stone to understand the real world of positive transaction costs, corporations, legal systems and government actions:<ref>{{cite web |last=Fox |first=Glenn |title=The Real Coase Theorems |url=http://www.canadianjusticereviewboard.ca/archive-Dr._Glenn_Fox_on_The_Real_Coase_Theorems.pdf |website=Cato Journal 27, Fall 2007 |publisher=Cato Institute, Washington, D.C. |access-date=17 February 2014 |url-status=dead |archive-url=https://web.archive.org/web/20130723053515/http://www.canadianjusticereviewboard.ca/archive-Dr._Glenn_Fox_on_The_Real_Coase_Theorems.pdf |archive-date=23 July 2013}}</ref><ref name="Coase1988_1">{{cite book |last=Coase |first=Ronald |title=The Firm, the Market and the Law |year=1988 |publisher=University of Chicago Press |location=Chicago, Illinois |page=13}}</ref><blockquote>I examined what would happen in a world in which transaction costs were assumed to be zero. My aim in doing so was not to describe what life would be like in such a world but to provide a simple setting in which to develop the analysis and, what was even more important, to make clear the fundamental role which transaction costs do, and should, play in the fashioning of the institutions which make up the economic system.</blockquote>Coase also wrote:<blockquote>The world of zero transaction costs has often been described as a Coasian world. Nothing could be further from the truth. It is the world of modern economic theory, one which I was hoping to persuade economists to leave.  What I did in "The Problem of Social Cost" was simply to shed light on some of its properties. I argued in such a world the allocation of resources would be independent of the legal position, a result which Stigler dubbed the "Coase theorem".<ref name="Coase1988_2">{{cite book |title=The Firm, the Market and the Law |last=Coase |first=Ronald |publisher=University of Chicago Press |year=1988 |location=Chicago, Illinois |page=174}}</ref></blockquote>

Thus, while Coase himself appears to have considered the "Coase theorem" and Coasian solutions as simplified constructs to ultimately consider the real 20th-century world of governments, laws, and corporations, these concepts have become attached to a world where transaction costs were much lower and government intervention would unquestionably be less necessary.

====Fundraising====
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A minor alternative, especially for information goods, is for the producer to refuse to release a good to the public until payment to cover costs is met. For instance, [[Stephen King]] authored chapters of a new novel downloadable for free on his website while stating that he would not release subsequent chapters unless a certain amount of money was raised. Sometimes dubbed ''holding for ransom'', this method of public goods production is a modern application of the [[street performer protocol]] for public goods production. Unlike assurance contracts, its success relies largely on social norms to ensure (to some extent) that the threshold is reached and partial contributions are not wasted.

One of the purest Coasian solutions today is the new phenomenon of Internet [[crowdfunding]],<ref>{{Cite web |title=Crowdfunding: What It Is, How It Works, and Popular Websites |url=https://www.investopedia.com/terms/c/crowdfunding.asp |access-date=2024-07-01 |website=Investopedia |language=en}}</ref> in which case rules are enforced by computer algorithms and legal contracts, as well as social pressure.  For example, on the [[Kickstarter]] site, each funder authorizes a credit card purchase to buy a new product or receive other promised benefits, but no money changes hands until the funding goal is met.<ref name=kick>{{cite web |title=Kickstarter FAQ |url=https://www.kickstarter.com/help/faq/kickstarter+basics?ref=faq_nav#Kick |access-date=17 February 2014 |archive-url=https://web.archive.org/web/20140226050118/https://www.kickstarter.com/help/faq/kickstarter+basics?ref=faq_nav#Kick |archive-date=26 February 2014 |url-status=live |df=dmy-all }}</ref> Because automation and the Internet greatly reduce the transaction costs for pooling resources, project goals of only a few hundred dollars are frequently crowdfunded, far below the costs of soliciting traditional investors.