The Exclusive Kitchen Club

I live with seven other girls in a cozy (ie. cramped) house on the corner of 14th Street and Wertland. In addition to a standard kitchen and dining room, you can walk through my friend Hanna's room to reach a second back kitchen. Generally, a kitchen is a non-rivalrous good. However, it can certainly get crowded at meal times, so Hanna's second kitchen provides a great marginal benefit to everyone. That is, everyone except for Hanna.

Hanna was facing a negative consumption externality due to the smell of trash and leftover food creeping into her bedroom. When the kitchen was dirty, this smelly externality caused her social marginal benefit of the kitchen to decrease. While everyone likes the idea of having a clean kitchen, Hanna was the only one whose additional benefit of having a clean kitchen was worth incurring the cost of actually cleaning the kitchen. This led to a free-rider problem in which she would provide a clean kitchen even if no one else contributed towards the cost. As you might guess, Hanna quickly grew sick of this setup.

This Monday, when I walked downstairs to cook breakfast, Hanna's door was locked. When I knocked, she responded that she no longer would publicly provide a clean kitchen to a bunch of free riders (something along those words... perhaps a little less economic and more insulting). Being the rational roommate I am, I explained that we could pay her to compensate for the externality she dealt with when we dirtied up her kitchen. However, she was not into my Coasian solution. Public policy majors, amirite? As I was doing my public choice reading that night, I realized my solution was right in front of me. I rushed down to Hanna's room, and for the small price of taking out the trash, I gained access into the now-excludable back kitchen club. I tipped off another two roommates, and they bought their way in by agreeing to wash dishes. Now, Hanna no longer faces the stinky results of the free rider problem, and each kitchen is shared at an optimal level that allows me to make my meals in peace. Take that, Batten!