Originally Posted by
minnyfly
In general. There will always come a point in that same market where avoiding the VDB is the best financial option. Someone will lose out if the situation is like this UAX flight.
The only case in which UA fails to get volunteers is when the "willingness to accept" (i.e. the amount of vouchers needed to lure someone off the plane) of everyone on the plane is greater than UA's willingness to pay (in vouchers) to move its employees. In that case the socially optimal outcome is for no passenger to be displaced and for UA to find other transportation for its employees, or just pay the costs of them being late. In concrete terms, if the
least inconvenienced passenger will still be inconvenienced by $2000, and it's only worth $800 to UA to get its employees on that flight, then the correct resolution is for UA to find other transport for its employees.
Again this assumes UA is competently run. If UA is incompetently run, which I grant is a distinct possibility, then it might not understand its own cost structure. At that point however we're just telling the govt to step in and issue policies to make UA's business decisions for it. I'd rather just let the company go out of business in that scenario.