In Eco 101 you probably learned that one of the big issues that arises whenever there is an effort at collective action in the absence of a central authority is the free-rider problem, otherwise known as "positive externalities." Let's go over it again, because some of us (myself included) have allowed our memories of Eco 101 lessons to become ... less than fresh. Textbook analogy: An entrepreneur creates a drive-in movie theatre, because it is cheaper just to put up a screen than to build a whole building. At first things work fine but over time cinephiles discover that they don’t have to drive into the entrepreneur’s lot and pay him in order to watch the movie: they can enjoy the same movie for free by parking on the opposite side of the street. The entrepreneur either internalizes the benefit (puts up walls) or he goes out of business. So external benefits, that is, benefits available to freeloaders, threaten the viability of the whole enterprise. That is on...
