Skip to main content

Economics 201: same shops on the same street?

Image
By
From 201009 Saudi scenes
In the town of Rahima, near the central fish market, is a street we call Chicken Street. Literally fifteen shops in a row (you see the middle 5 pictured above) sell chicken. In our standard idea of economics, this appears to be inefficient and unprofitable -- we feel that if the poulterers all dispersed to different parts of the town, they could corner a local market as the closest convenient shop, and also reduce the likelihood of customers taking their business elsewhere.
So why do they all locate in one central place, and thus struggle mightily to compete, perhaps reducing their profits and by the way forcing chicken customers to travel all the way downtown?
I think the main reason is that customers prefer the open-market scheme, where they can compare goods from different sellers in an open environment analogous to the nearby old-fashioned fish market. A lone market can be attractive when the goods are indistinguishable commodities -- in a U.S. supermarket, we trust most packaged chicken quality (though of course companies spend millions trying to convince us of the distinctiveness of their mostly identical products) and we trust that the pricing is competitive, so we will buy a chicken at the nearest market.

Another important aspect of this clustering is transportation, and the difficulty of moving perishable goods to the market. It is much more efficient to deliver all the chickens to one location -- less chance of spoilage and problems en-route.

We see a clustering effect at shopping malls: each mall needs some Anchor stores, the big names that will draw customers to spend time in the area, where customers trust they will be able to see an assortment of products from different sources.

In Rahima, we also enjoyed some delicious fresh Afghani bread, hot from the oven:
From 201009 Saudi scenes

Comments

Post a Comment

Popular posts from this blog

Beirut, Byblos, and walks in the city

By
There are police, and barriers, in Beirut.  Our first 2 days in one neighborhood were quite peaceful.  Yesterday we walked further, to see more typical signs of concrete barriers and razor wire and military guards around the former President's house, and then today around the Saudi Arabian embassy.  We also note the flurry of construction activity, both buildings and roads; yet in amongst the renovated sleek apartment buildings and shopping malls are old walls pockmarked with bullet-holes, and empty shells of buildings including the bizarre alien-looking building in the center of town.      Cole and I attended a lecture by Tariq Ramadan at the American University of Beirut -- educational, fascinating even though Prof.Ramadan was speaking quite academically and not wanting to get tied down.  The question-and-answer session was even more enlightening, to hear the emotional and articulate ripostes and sallies.  About 400 people attended. ...
Post a Comment
Read more

Driving everyone crazy

By
One of the lightning rods of dissent in the Kingdom is the government's refusal to permit women to drive. We know of no other nation with this ban; and to compound the confusion, there is apparently no explicit law banning it, just a reference to a decree in 1991. Like the other irritating restriction of the niqab veil, it also has no basis in the Koran, and therefore is not easily upheld in Sharia law. Recently the first name "Manal" has become a symbolic name, as the divorced Aramco IT expert -- she received awards for her expertise a few years ago -- drove a car near Coleman's high school last month and published the feat on YouTube. The deliberately banal video inflamed the sensibilities of the Saudi police, who detained Manal in the women's reformatory for 10 days. Her lawyer carefully pointed out that there was no law against her driving, and further she carefully avoided any reference to the Facebook group urging women to all drive on June 17th. St...
Post a Comment
Read more

Reservoir of European Youth, Parliament

By
 A few days ago I walked to the nearby Pasteleira Park, planning to visit the city museum at the Reservoir.  Walking through the park I noticed a large group of young people gathered in a circle, engaged in team-building activities.   My days in education attuned me to the spectacle and piqued my interest, so I sat on a nearby bench and watched as a succession of enthusiastic students ran to the center and started an activity, which all the others joined enthusiastically.  What sort of group would this be?  A typical high school class would include a portion of disinterested teens, and others only half-heartedly participating.  This crowd was unanimous in their excitement.   I also noted that the leaders were speaking in English, though the breeze muffled the words.  I walked around, found a couple of older participants on the side, with official-looking lanyards, and asked:  this was an activity of European Youth Parliament , simil...
Post a Comment
Read more