In the 12th century, Bologna was a center of intellectual and cultural life. Students came to Bologna from all over Europe to study with prominent scholars. These individual professors were not originally organized into a university; each one operated freelance, offering courses on his own and charging whatever fees students were willing to pay. If a professor was a lousy teacher or charged too much, his students would switch to a different professor; professors had to compete for students, and would get paid only if students found their courses worth taking.
Once the universitas had been formed, the students now had available to them a means of effective collective bargaining with the city government (rather like a modern trades-union). The students were able to exercise considerable leverage in their disputes with the city because if the students decided to go on “strike” by leaving the city, the professors would follow their paying clients and the city would lose an important source of revenue. So the city gave in, recognized the rights of foreign students, and granted the universitas civil and criminal jurisdiction over its own members. Although the universitas was a purely private organization, it acquired the status of an independent legal system existing within, but not strictly subordinate to, the framework of city government.
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