The Magic of Competition

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Mr. Fox is worried that there will be too many coffee shops around Rittenhouse Square:

We will say though, we’re a little concerned about the size of the “coffee pie” surrounding Rittenhouse Square. La Colombe has been stationed on the northern side of the square for over a decade, and Joe: The Art of Coffee will soon be opening just a hundred paces away. Meanwhile, on the south side of the square, Metropolitan just opened a new cafe next door to their popular corner bakery. And don’t forget the Cosi on Walnut Street, where plenty of people get their morning jolt as well. Can five coffee shops thrive right around Rittenhouse Square? Can five coffee shops survive?

One nice thing about life in a market economy is that we don’t have to worry about stuff like this. Maybe Mr. Fox is right and Rittenhouse can’t support 5 different coffee shops. If that’s the case, the shops that people like the least will go out of business, and some of their market share will be captured by the shops that people like better. Or maybe Mr. Fox is wrong, and 5 coffee shops can survive around the park, in which case they’ll try to capture market share from the others by competing to offer customers lower prices and higher quality coffee and food. Whatever happens, coffee drinkers are in for some better coffee and lower prices.

Unless of course somebody persuades state politicians to pass some kind of occupational licensing bill for baristas, or a County Quota system capping coffee shop permits.

This entry was posted in Miscellany.

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