On the fire department thing -- the incentive to pay was that you weren't paying for private firefighting at all, you were paying for fire *insurance*, and the insurance companies ran the firefighting groups to reduce how much they'd have to pay out. So if you didn't pay, the firefighters would still try to protect your house, but you'd have no insurance if they failed.
It does seem like the free-rider problem was still significant, though; the paper mentions that the system ended because the insurance companies asked the government to take over firefighting, and while I didn't read the whole thing, it sounds like the free-rider problem played a role there?
(Of course this is all just talking about how this went down in the UK -- the paper doesn't discuss how things went elsewhere.)
On the fire department thing -- the incentive to pay was that you weren't paying for private firefighting at all, you were paying for fire *insurance*, and the insurance companies ran the firefighting groups to reduce how much they'd have to pay out. So if you didn't pay, the firefighters would still try to protect your house, but you'd have no insurance if they failed.
It does seem like the free-rider problem was still significant, though; the paper mentions that the system ended because the insurance companies asked the government to take over firefighting, and while I didn't read the whole thing, it sounds like the free-rider problem played a role there?
(Of course this is all just talking about how this went down in the UK -- the paper doesn't discuss how things went elsewhere.)