Who was my favorite student this term?
7 years ago
Thursday, August 18, 2011
CWA strike
Richard Epstein on the strike by the Communications Workers of America. The analogy to regulated utilities is a useful one, and it had never before struck me to think of strikes and lockouts as generators of negative externalities (i.e. costs imposed on innocent third parties) that are not compensated. Surely the optimal response is to tax those, namely the firms and unions, who generate the externalities?
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There was an example, I think a bus strike in Florida, in which a judge made this a positive externality. While the strike was still going on, he ordered drivers to work without pay and their employer to provide services for free. Third parties were helped, not harmed, but the relative bargaining positions were affected.
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