16-4 A City and Its UnionsRobert G. Flanders Jr., the state-appointed receiver for Central Falls, RI, said his city’s declaration of bankruptcy had proved invaluable in helping it cut costs. Before the city declared bankruptcy, he said, he had found it impossible to wring meaningful concessions out of the city’s unions and retirees who were being asked to give up roughly half of the pensions they had earned as the city ran out of cash. Why does bankruptcy give the city bargaining power against its unions? 16-4 A City and Its UnionsRobert G. Flanders Jr., the state-appointed receiver for Central Falls, RI, saidhis city's declaration of bankruptcy had proved invaluable in helping it cutcosts. Before the city declared bankruptcy, he said, he had found itimpossible to wring meaningful concessions out of the city's unions andretirees who were being asked to give up roughly half of the pensions theyhad earned as the city ran out of cash. Why does bankruptcy give the citybargaining power against its unions?

Robert G. Flanders Jr., the state-appointed receiver, discovered an unexpected benefit in an…

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Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 16.4IP

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16-4 A City and Its Unions Robert G. Flanders Jr., the state-appointed receiver for Central Falls, RI, said his city’s declaration of bankruptcy had proved invaluable in helping it cut costs. Before the city declared bankruptcy, he said, he had found it impossible to wring meaningful concessions out of the city’s unions and retirees who were being asked to give up roughly half of the pensions they had earned as the city ran out of cash. Why does bankruptcy give the city bargaining power against its unions?