So is intervention in a free market a good thing?
"Economics preaches that interfering with competitive markets is welfare reducing; however, it may be beneficial when externalities are involved. This would be the case should the utility of taking a vacation increase when other people, like the vacationer's spouse or friends, also go on vacation - an example of positive externality of leisure. In this case, there would be too many working hours in a competitive economy, since it is difficult for workers to coordinate their actions and go on vacation all at the same time. A union constraining everybody to work less may therefore make everybody better off. It is difficult to empirically assess the merit of this argument, since leisure externalities are difficult to measure, but it may undoubtedly be true."
(BTW, the site Smart Economist is a great site that attempts to take recent research findings and translate them into something comprehensible by ordinary citizens. Check it out!)
