DC street band, Spread Love, plays regularly on the corner of 15th St. and New York Ave, situated nicely in the heart of DC’s tourist district, near Lafayette Square and the White House. People walking past the band on their way to work or to visit tourist attractions in the nation’s capital enjoy the live music and show their appreciation by tipping heavily while walking past. Unfortunately, not everyone enjoys the live music. Specifically, the employees at the US Treasury Department and a large DC law firm who have offices at that intersection.
Employees in the nearby offices complain that the band is a nuisance and the noise distracts them from their work. Some offices and conference rooms in the buildings have been rendered unusable due to the noise. Employees have been forced to work wearing headphones or have brought in white-noise machines to drown out the music.
In an attempt to stop the music, the nearby law firm contacted the Secret Service and the DC police. However, the police determined that the band’s performances were legal, and they were not violating any noise ordinances. After failing to force the band away, the law firm tried one last method: pay them to go away. The law firm offered the band $200 per week to go play somewhere else. Drummer, Lonnie Shepard replied, “we can make that in an hour.” The band declined. Given that a US District Court Judge ruled that playing street music is a First Amendment-protected activity, it appears the neighbors will just have to face the music.
Discussion Questions:
- The street musicians are imposing a negative externality on the law firm and other employees in the area. What might be included in the calculation of Marginal Damage Costs in this situation?
- Does this situation satisfy the conditions that would allow for a Coasian bargaining solution? If not, which assumptions are violated?
- Assume the Coase Theorem’s assumptions are all met in this situation. Is this an efficient outcome? Explain.
- Economic theory suggests that in a private market, public goods will be under-produced. Does street music satisfy the characteristics of a public good? If so, why might some (i.e. the law firm) believe there is too much of it?
Sources| Washington Post: https://www.washingtonpost.com/local/dc-street-bands-brassy-riffs-earn-it-tips-from-tourists–and-enmity-from-the-high-powered/2015/07/30/7fde663a-349a-11e5-8e66-07b4603ec92a_story.html; YouTube: https://www.youtube.com/watch?v=XqPh_HmfN4E; Photo by Reuben on Unsplash