Traveling in and out of the New York City area around the holidays is difficult and hectic under the best of circumstances. I happened to be traveling there last month just as the New York City transit workers were threatening to walk out on their jobs. The NYC busses, subways, and trains serve the city’s 7 million daily commuters, and the threatened strike came up less than a week before Christmas and Hanukkah.

NYC transit workers did strike—for three days—at an estimated cost to the city’s businesses and employers of $1 billion ($400 million per day, give or take a few hundred million). To deal with the strike, millions of workers 1) walked the Brooklyn Bridge or Manhattan streets to get to work, 2) stayed home and lost pay, 3) tried to carpool from Long Island, uptown Manhattan, Staten Island, and New Jersey, or 4) camped at their offices or drove in at 2 a.m. before the carpool rules kicked in. Holiday shoppers and tourists stayed away in large numbers, by choice or by default.

The settlement for transit workers will impose future costs on transit riders and (likely) New York City taxpayers as well. How could one group of workers virtually shut down New York City mere days before one of the busiest holiday weekends of the year?

The answer is ‘monopoly.’ Because virtually all transit workers in New York City are unionized, the union holds a monopoly on the supply of workers to these jobs. In effect, the transit workers’ union controls all public transportation into and out of New York.

The common perception of monopoly is that it creates a harmful situation for consumers due to its one-sided market power. That power is used to favor the supplier (monopolist) at the expense of the consumer. How? Monopolists tend to restrict supply in order to raise the price of their product or resource. Consumers get less of the product or service than they want, and since monopolists can force prices up, consumers lose.

One of the reasons that cities like New York have made transit strikes illegal is the fact that most riders cannot immediately opt for a reasonable substitute—they can’t just ‘take it or leave it’ when it comes to public transport. Adjustments like finding other rides, or even jobs outside NYC, for example, take time.

These problems are associated with all legal monopolists. Once an industry is exclusively represented by a single union, competition among labor resources (especially competition based on lower wages or fewer benefits) is precluded. New York City wanted to raise the full-benefits retirement age for transit workers from 55 to 62, in keeping with U.S. workers’ longer, healthier lifespans; the union wanted to reduce it to age 50. City managers want to avoid the fate of U.S. auto makers like GM who, saddled with huge union-negotiated pensions and retirement benefits, recently faced the threat of corporate insolvency as a result. GM opted to close plants and lay off workers. NYC can’t simply close the subways and cut back production of public transport in any reasonably near term. Should NYC privatize those services? It would be a better proposition for consumers, though the political aspects are daunting.

One aspect of the recent situation revealed some potential for keeping cities like New York from being held hostage to perpetual or unreasonable union demands. Basically, a transit worker’s union exists there only because the sole employer —in this case New York City—stands ready to hire them. They have no other market opportunity at the moment. This makes New York a monopolist on the buyer’s side, technically, a monopsony. Because of this, cities like New York have more bargaining power than otherwise with unions. Barring a situation like the air traffic-controllers faced in 1981, both sides must, for the moment, trade with each other.

The view that monopolists create harms to consumers is true so long as the monopolist enjoys legal protection from competition. If other workers were allowed to compete for public transportation worker jobs (not just as strike-breakers), it is clear that the damage to the City’s industries, entertainment, and services would have been less severe—and the strike far less likely in the first place.

As it is, the outcome in New York over transit workers’ pensions and retirement may have initiated a new tough line from employers—to control soaring costs—and brought more economic reality to the bargaining table. If so, it is a much-needed counter to the entitlement mentality that has permeated union negotiations in both public and private industry.