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Central Planning in the Urban Retail Economy

By Matthew Yglesias on March 19, 2011 at 8:31 am

"Central Planning in the Urban Retail Economy"

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Here on the Prince of Petworth blog is what purports to be a map of liquor stores in DC’s Bloomingdale neighborhood, though in fact it proceeds by counting every store licensed to sell beer as a “liquor store.”

So for today’s Friday Question of the Day – at what point does a neighborhood have too many liquor stores? Now I’m wondering if there is a historical component here – as many liquor stores also function as corner stores/bodegas. I assume they proliferated for convenience and perhaps a lack of access to proper grocery stores? But in 2011 given the state of our neighborhood’s access to grocery stores and the existing corner stores – at what point are there too many liquor stores? Should there be moratorium? Or should capitalism work this problem out?

I’m going to vote for capitalism here. Free markets have some flaws, but assessing the market demand for retail beer sales (again, if this were an actual map of liquor stores we could talk about liquor) and supplying a roughly appropriate number of beer retailers is exactly what free markets are good at doing. If anything the evidence suggests to me that the DC government is too stingy with these licenses and is allowing a lot of storefronts to stand vacant when convenience stores could be profitably operated.

Now if your concern is that demand for beer is undesirably high, the right proposal would be higher excise taxes on alcohol. I think there’s a lot of evidence that this would be good policy. But this is very different from trying to assert that somehow the market is incapable of matching the actual level of demand for beer vendors to the demand for beer.

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