Good economics is done by paying very close attention to things — often things hidden, but often things in front of one’s face.
What’s in front of my face as I look out my College of Coastal Georgia window is the stretch of Altama Avenue from Fourth Avenue to Cypress Mill Road.
This busy 1.7-mile stretch of road has a lot of economics to teach.
For instance, there are nine restaurants on this section of Altama: Popeyes, Big A Barbecue, Willie’s Weenie Wagon, Baskin Robbins/Dunkin Donuts, Tio Taco, New Hong Kong, Waffle House, McDonald’s and Michael’s Deli.
A month ago the list would have numbered 10, but, unfortunately, the Chicago Grub Hub is no more.
Attention to that 1.7-mile stretch of Altama ought to make one extremely skeptical of the old yet still commonly held notion that capitalist competition invariably leads to monopoly.
In the strict sense, monopoly is a market consisting of a single firm that sells a product for which there are no close substitutes. In the loose sense, monopoly is a market in which one firm has a significantly greater market share than its rivals.
Now, think a bit beyond restaurants to all your other hometown market dealings. Food items. Housing. Autos and auto repair. Clothes. Gas. Appliances. Furniture. Banking. Medical care. Continue down your list.
How many monopolies in either the strict or loose sense do you deal with?
If it weren’t for utilities, which are government established monopolies, the answer would be zero.
How about concentrated industries, industries in which two, three or four firms account for the bulk of an industry’s sales?
Concentrated industries are not very common in the U.S., but one can find them. The auto, breakfast cereal and soft drink industries are considered concentrated.
The worry about concentrated industries is that firms with few rivals might be less compelled to keep prices down and quality up.
But the worry does not seem justified by experience. Thanks to imports, there’s loads of competition in the U.S. auto market.
And the three firms that account for 80 percent of breakfast cereal sales and the two firms that account for 70 percent of soft drink sales didn’t achieve their market shares by neglecting consumer preferences.
Precisely the opposite. The variety of cereals and soft drinks these firms produce is staggering.
It is true that, if one lives in a small town such as Darien or Nahunta, choices for certain goods or services can be few.
But Brunswick is nearby, and Savannah and Jacksonville are not far.
Much better, goods from stores all over the planet can be purchased online on one’s cellphone. The internet and cellphones make much of the rest of the world part of hometown.
There’s also a widespread idea that small, local firms can’t compete with big chain stores.
Clearly they can. Of the nine restaurants on the 1.7 mile strip of Altama, four are chains. Willie’s, which is a local legend, New Hong Kong and Michael’s are small, local businesses that have been operating for decades.
And how about downtown Brunswick? Downtown is in the midst of an exciting revitalization. Who’s leading the way? Local entrepreneurs, not big chains — though there’s plenty of room for both, as we see on Altama Avenue and all over hometown.