Extraordinary Observations

I don't do much driving, but this year, I've made a couple of long-distance trips. The first was a round-trip between Washington and Akron - about 700 total miles. The second was the round-trip between Washington and Virginia Beach I did back in August - about 420 total miles. The first trip cost an extra $30 in tolls. The second trip was "free" as we often think of it. The first trip was generally low-stress and easy to drive. The second trip was high-stress and challenging to drive. Both trips took roughly the same amount of time (6 hours each way).

There's a really interesting article over at GOOD about the power that Yelp has on local businesses. It describes my behavior pretty accurately, and makes me realize just how crucial a tool Yelp has become in my own life; and also for the businesses I patronize.

Last week this headline caught my attention: "Pizzeria Eschews Groupon, Offers Own Half-Off Deal". The article is about a gourmet pizzeria in Arlington that will offer half-price pies every Monday... all you have to do is walk in and ask for the deal.

1. Removed blackout dates from discounts
2. Applied discounts to the entire menu
3. Offered a one-time email blast advertisement to a huge mailing list of people
   

Kojo Namdi did a very good show on coffee last Wednesday. Click through and listen to the segment, it's about a half-hour long and it's very good. They even produced this little video up at Qualia Coffee (hands down the best coffee shop in DC).


The show covers a number of coffee-related topics that I've written about here, including home roasting and culture around good coffee. Coffee is an interesting drink because the quality can vary so wildly depending on how it's roasted, ground and ultimately brewed. And unlike wine or beer, coffee is always made to-order. Someone can appreciate good wine, but wine is fermented and then stored in glass bottles. Beer is brewed and then canned or bottled. Someone who appreciates good coffee has to also appreciate the process by which its brewed in the moments immediately before it's enjoyed.

Streaming video is the wave of the future? Right? That's what Netflix seems to believe, and what a lot of people are really wishing will be true. I'm not quite as optimistic.
I actually see a future where streaming video is more like premium cable than like a high-tech video rental store.

Lydia DePillis wonders if competition will really improve car sharing in the District. I'm not too certain it will, as I wrote over the summer. In any case, plenty of people are happy that there's competition coming, because they love the idea of competition. Monopolies, on the other hand, have a pretty bad reputation.


Not every market is perfectly competitive. Sometimes monopolies can and do provide goods and services more efficiently than several competing companies. This is usually the case in industries with high start-up and capital costs, which is very much the case with car sharing. The monopoly chapter of any intro to microeconomics textbook lays this out pretty clearly.

When people say they don't like monopolies, I think what they're really saying is that they don't like taking on the risk that the monopolist is going to fail to provide good customer service or reasonable prices.

Comcast is a great example of this. In much of the DC area, if you want cable TV or cable broadband, Comcast is your only option. They also happen to have dreadful customer service, so when your blood is boiling after spending hours on the phone trying to get your service to work, the thought of switching to somebody else is highly appealing.

Ticketmaster is another example. They're virtually the only game in town when it comes to concert tickets, and the "fees" they charge have upset plenty of folks. There is a legitimate fear that once a company becomes a monopolist that they'll jack up prices and screw customers who no longer have anywhere else to turn.

Zipcar, for what it's worth, has gone above and beyond for me on more than one occasion. I've found their service to be excellent, and even when new competitors enter the market, I'll keep my Zipcar membership. The truth is that they do have competition, it's just from different modes of transportation, not from other car sharing companies. When I need to go somewhere, it's not necessarily a question of which car sharing service to use, but what mode of transportation to use.

Stephen Smith has a post about housing and gentrification that I think hits on some good points, but it only tells one piece of a bigger story about how housing markets works. He opens with this:

When libertarians (and liberals) argue that increasing the supply of urban housing will lower the price of urban housing, they’re drawing on some pretty basic and well-established economic concepts. And yet, the coexistence of gentrification and housing supply growth seem to put a lie to that theory – in cities across America, we see neighborhoods adding housing while still seeing rapid increases in the price of housing. From the point of view of the poor and often non-white residents who are being pushed out, the market remedy of increasing supply just doesn’t seem to be working.

Count the number of times the word "supply" appears. Now count the number of times "demand" is in the above paragraph. Herein lies a major problem with this discussion: it focuses way too heavily on the supply side of the equation. After all, the price of housing is measured as the equilibrium of supply and demand. If you ignore the demand-side, of course you're going to be perplexed when you see a boost in supply accompanied by a rise in price levels. It doesn't put a lie to the theory. In fact, it proves the theory.


I tackled this issue recently, arguing that we can't really talk about the "housing market" because housing isn't homogeneous. People are willing to pay more for high-quality housing than they are for low-quality housing. So if you change the type and quality of housing in a neighborhood, you alter the underlying structure of the market itself, and the price at which people are willing to pay to live there, all else equal.

But let's set that aside for a moment and assume, for argument's sake, that housing is a commodity. From a theoretical perspective, we can draw the housing market as a series of simple charts, similar to what you might remember from an intro to microeconomics course.

I've got a new post over at Greater Greater Washington about two coffee shops in my neighborhood. A block apart from each other, one opened just a few months before the other closed. In a twisted way, the situation shows that 14th Street is both a desirable place where businesses want to be, and a place where it's nonetheless difficult to run a business.


When I lived in Cleveland, it was painful to watch businesses fail. Usually, it happened because there weren't enough customers, and the businesses couldn't generate sufficient sales. It happened because businesses just couldn't get people in the door and at the end of the day that was hardly any money in the till.

In DC, it's like the polar opposite. On 14th Street, businesses are closing because they can't afford the rent. They need affordable retail space in order to survive, and they simply can't get it in a neighborhood that's becoming popular.

Both situations demonstrate problems; but in DC, when a business closes, it's usually replaced by a different, more upscale, more expensive business. In Cleveland, when a business fails, it often becomes a vacant storefront. So while yes, it's frustrating to see 14th Street losing its unique character as its long-time businesses close for another upscale restaurant I can't afford, I like to think that I haven't lost touch with the reality that the situation could be so much worse.