Journal Files A.A.S
Econ of Scale, Wal-Mart and Urban Decay
The Wal-Mart phenomena is an example of economies of scale and the resulting price/variety tradeoff.
Wal-mart has lower prices than the previous small stores (and perhaps somewhat greater product variety) but the single big box store does not offer a variety of shopping experiences and ambiance, and service levels.
Some consumers will like the lower unit prices and some prefer the previous variety. Who gets to choose the quality of the good that will be available?
The downtown environment is threatened by the big box stores. Who is the factor owner? Wal-mart can buy land at the edge of town. Does that mean they own the right to destroy the old downtown? (Same question if they destroyed the peace and quiet of neighbors.)
The Cape Cod Commission an organization of 15 area communities prohibited (by zoning?) A proposed store in Sandwich MA by Price/Costco. (New York Times, June 20,1996. Price/Costco sued for damages but the court issued an injunction to stop development.
Information on a similar battle with Wal-Mart in Ferry Farm VA is available on www.MO.NET
In Michigan, see Doug Cantor, "Petoskey Fights Wal-Mart Battle," Detroit News, Sept. 1996.
In 1997, Denmark passed a moratorium on new suburban malls.
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If you have any questions or comments, please email schmid@pilot.msu.edu
