I'm a student at the Wharton School in the University of Pennsylvania, and I have just taken Microeconomics last semester. On the whole, I am completely against most forms of governmental control, however, I could not find a good way to deal with the 'free-rider' problem. If the government did not do research on this topic, there would be no incentive for a private company to do research because as soon as they found the answer, it would become common knowledge, and there wouldn't be a market for it. I suppose it is similar to 'intellectual property'. Another topic which I would like to clarify, is the definition of a perfectly competitive society.
Customers know the nature of the product being sold and the prices being charged by each firm.
All firms are price-takers and produce small amounts in relation to the industry. The industry is assumed to be characterized by freedom of entry and exit. If these points are looked at superficially, it may seem like there is nothing wrong with them. However, when they are taught, it is entirely a different matter. After the professors convince the students that a perfectly competitive society is the optimal one.