Free riding

Free riding occurs when one firm (or individual) benefits from the actions and efforts of another without paying for or sharing the costs. For example, a retail store may initially choose to incur costs of training its staff to demonstrate to potential customers how a particular kitchen appliance works, in order to expand its sales. However, the customers may later choose to buy the product from another retailer who is able to sell it at a lower price because his business strategy is to do without such training and demonstration, thus avoiding the costs involved. This second retailer is thus viewed as ‘free-riding’ on the efforts and costs incurred by the first retailer, who will lose the incentive to continue demonstrating the product.
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RO: Parazitism
FR: Parasitisme
HU: Élősködés

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