We usually think of WM replacing small retailers. Don Boudreaux asks, what if it were the other way around?
Suppose that Wal-Mart today is the only retailer in town, situated (as it typically is) on a large plot of land a few miles from downtown. Tomorrow, smaller rivals open up on Main Street. Further suppose that each consumer truly wants the Wal-Mart to remain open. (Perhaps consumers have become familiar and grown comfortable with Wal-Mart.) But although each consumer truly prefers that Wal-Mart survive, each consumer also chooses to patronize the more conveniently located downtown retailers. That is, each consumer tries to free-ride on what he hopes will be other consumers� continued shopping at Wal-Mart. But with each consumer acting in this way � with almost all of them opting to enjoy the greater personal convenience of patronizing the close-in Main Street retailers rather than suffering the inconvenience of driving out to the Wal-Mart � the Main Street retailers prosper and the beloved Wal-Mart shuts down.If that sounds implausible or silly to you, think about what the same argument implies to the current situation, when it is WM that is replacing small retailers....
Posted by Kevin on March, 6 2005 at 03:38 PM
