In various parts of economics, the term free disposal implies that resources can be discarded without any cost.
The term is usually employed to refer to situations that do not have free disposal.
For example, the Electricity market does not have free disposal, as stopping the production of large plants can be very expensive. This creates the phenomenon of Negative pricing, where it is more economical for plant operators to pay electricity consumers for disposing of the excess energy than it would be to stop generation and start it again when demand is higher.
There also exists situations that do have free disposal, for example a fair division setting with free disposal is a setting where some resources have to be divided fairly, but some of the resources may be left undivided, discarded or donated.
Examples of situations with free disposal are allocation of food, clothes jewels etc. Examples of situations without free disposal are:
The free disposal assumption may be useful for several reasons: