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West Coast Ports Strike Settlement

Greenhouse, S. (2002, November 25). Both sides see gains in port agreement. New York Times Online. Retrieved from the Internet on 2002-11-25 at: http://www.nytimes.com/ 2002/11/25/national/25PORT.html?

Section One: Economic Concept Discussed in Article

This article deals specifically with the settlement of the West Coast ports strike in the United States. Estimates were that the strike caused $1 billion damage to the United States economy for each day it continued. The settlement reached between the dock workers and the dock operators involved tradeoffs that satisfied the needs of both parties.

The principle economic concept discussed in the article was indifference. The tradeoffs allowed each party ù the dock workers and the dock operators ù to reach a point where the combination of the concessions they received and the concessions that had to make reached equilibrium at the point on the indifference curve where they could accept the settlement.

Section Two: Economic Theory Involved

While the dock workers and the dock owners came to their agreement based on tradeoffs that produced an indifference curve acceptable to both parties, an important economic theory underlying the negotiations was the time value of money. The time value of money in these negotiations was determined through the application of net present value analysis, i.e., what is the value today of the concessions the parties made for payment in the future. Chart 1, below on this page, illustrates an indifference map.

The terms ôGood Yö and ôGood Xö can represent any two factors of importance to the parties concerned. As a general rule, the farther to the right an indifference curve is, the greater is the probability that the combinations of goods that lie along the indifference curve will yield a higher utility.

In the settlement of the West Coast ports dispute reported in the article, the principal points of dispute were (1) dock worker...

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West Coast Ports Strike Settlement. (1969, December 31). In LotsofEssays.com. Retrieved 06:30, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1713113.html