Market Affirmative Action

This Article applies the economic theory of regulation to laws forbidding discrimination or requiring affirmative action. It argues for using transferable rights in order to achieve diversity rather than quotas. Based on economic theories, the Article finds that the most efficient remedies for discrimination are the ones already developed by economists for other problems. The author suggests that discriminatory cartels can be prohibited or undermined, discriminatory signals can be overcome by supplementing market information, and external effects of prejudice can be internalized by tax subsidies. He concludes that perfect competition causes discriminators to pay for segregation, and some current antidiscrimination laws stifle enterprise unnecessarily.