Bake the Cake? Or Bake the Cake! Potential Resolutions to Business Discrimination

Bake the Cake? Or Bake the Cake! Potential Resolutions to Business Discrimination

  • Case
  • Teaching Notes

The question of whether goods and service providers ought to be permitted to decline to conduct business with potential customers was recently put to the Supreme Court in Masterpiece Cakeshop v. Colorado Civil Rights Commission (2018). The case raises questions over whether intentionally discriminatory business practices ought to be permitted in narrowly defined circumstances. The owner declined to bake the cake for a gay wedding, citing religious objections. A complaint was then filed with the Colorado Civil Rights Commission. The case study evaluates the advantages and drawbacks of two primary means of resolving the conflict, state directed and market-based.

The operating assumptions and incentive structures differ between the two institutionally informed arrangements. The former (i.e. the state) barters in votes and political capital, the latter (i.e. markets) in dollars and cents. Civil rights claims are often upheld by government because it is viewed as an impartial arbiter that can impose fairness on unjust practices that big business sometimes engages in. After all there are some principles that deserve to be defended, regardless of the costs. On the other hand, resolving complex, culturally divisive topics might be better addressed by competitive markets because entrepreneurs are interested in maximizing profits by providing more of what consumers are demanding. Students are asked to consider the alternatives available in reaching a maximally beneficial arrangement in achieving a just balance between these competing interests.

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