Because of this problem, the market will provide a quantity of the public good that is less than the efficient quantity. Recall that once a public good is provided it is available for all to consume. This means that people have an incentive to hide their true preferences for the good. As more and more individuals engage in this preference-hiding behavior, efficient market provision will fail. For example, suppose a neighborhood consisting of ten homes has had problems with theft.
Residents decide to hire a private security guard to patrol the neighborhood.
Now suppose that one neighbor, Gus, decides not to pay. Gus, who no longer pays for the service, still receives protection. He becomes a free rider. Barbara sees that Gus pays nothing and still receives the benefits of the guard. She engages in the same behavior.