Monday, March 23, 2009

Hotelling's Model...Morgantown Porn Shop Edition

One of the fun parts of teaching economics is having students try and explain reality using the tools of economics. While a grad student at WVU I would draw this basic map of downtown Morgantown, where CH is City Hall, MC is Municipal Court and police station, and FC is the Family Court:
Notice the three X's: they mark the location of three erotica outlets. High Street is where all the main downtown retailers locate, and it has the heaviest traffic flow of anywhere in town. Notice that the X's seem to be concentrated in the same area. The questions I would pose to my students then is:
Why do we observe this spatial concentration of erotica shops in Morgantown? Why is erotica most valuable at those locations? What role does the environment or neighbors play, if any?
My students and I over time hashed together the following list of potential answers to these questions:
  1. Hotelling's model of spatial competition. Like the ice cream vendors on the beach or the shoe stores at the mall, the competitors wind up locating next to each other.
  2. The stores want to be on High Street, but the business association doesn't allow them in, and so they end up as close as they can get to High Street.
  3. The stores want to be close to High Street, but not on High Street because the stores balance wanting to be seen by their potential customers while their customers don't want to be seen going in/out of these stores.
  4. Lawyers, judges, police, and city officials are large consumers of erotica, and the stores are locating close to their customers.
  5. They want to locate close to the Family Court, as men exit the court in emotional ruin the erotica shops want to be there for them.
  6. (As a counter to #5) The Family Court is actually locating close to the porn shops in a rare demonstration of responsiveness to consumer demand...women who catch their men at the erotica stores want to know where they can file for divorce.
  7. Perhaps erotica stores are more likely to be robbed, so they locate as close as they can to the courts and police as a deterrent to thieves.
I think #1, #3, and #7 tell the story, but the list is a fun way to spend 15 minutes of class time while still learning some economics.

6 comments:

Michael Ward said...

We used to tell about celebrating Hotelling's birthday by downing a couple of pints at local Irish pubs. You guessed it, ... the only two Irish pubs for some distance were located across the street from each other.

Matt E. Ryan said...

I like #6!

Buy Cialis said...

I don't knwo to much about this, but makes sense, it's almost a thing of logic.
Thanks for sharing.

KM63

Buy Viagra said...

in this moment you have to think very well about open a business of this kind, specially in this zone, with all the competition you must to make a good work.

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sounds kindof good if you think of it

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