Unions using CON laws as barrier to entry

In earlier posts, we have pointed out how competitors and unions can use local zoning laws to slow down the forces of competition, and make themselves better off. Now we have an example of unions using Certificate of Need (CON) laws to keep out non-union hospitals.

As in the Wal-mart example, by keeping out new entrants, profits are higher at incumbent hospitals, which puts them in a weaker bargaining position with respect to their labor unions. From Chapter 14 of our textbook,

By increasing your opponent’s gain from reaching agreement, you make him more willing to compromise to reach an agreement, weakening his bargaining position.

CON laws are particularly anti-competitive, and drew the ire of the FTC when I was there (report, press release)

Indeed, there is considerable evidence that CON programs can actually increase prices by fostering anti-competitive barriers to entry.

Most states, though not Washington, have repealed their CON laws.