It’s been a long while since I lived in nyc but I used to go to several stores when I shopped in the weekend. I was not price sensitive then but went to different specialty place for meat and cheese and fish etc. But in your example why wouldn’t a consumer just buy the 30 % discounted items and then go somewhere else for the other stuff? Good for the consumer but has time and transportation costs. But bad for the the Mamdani store 🏬
Yeah, I live in NYC and this point is spot on. Lots of (most?) people here don't buy a basket, they assemble one. My neighborhood has two supermarkets, several fruit stands, a few bodegas, and you can bus, bike, or take the subway to any number of other specialty shops, other stores, etc. Marginal transport cost between stores is a block, which is probably the lowest in the country. Cherry-picking the pinned items and buying the rest elsewhere is nearly frictionless. Of course this cuts both ways: it also means the operator's economics might be worse than you're assuming.
I think scale is key here. You raise scale as an efficiency question but not as a market-structure one. Exit-then-market-power needs a footprint that isn't here. We're talking five stores against 8.5M people.
I like the Barzel point (I mean, I do read this substack aferall). Measurement costs are the binding constraint, but to me this reads as a design spec more than an objection. The city could price this into the RFP process by saying contractors have to have auditable in-stock rates, produce quality standards, checkout wait targets, and so on to get at some of the Barzel stuff.
The other thing is the counterfactual. This model puts an efficient rival at the other end of the neighborhood segment. The whole point of announcing this in the Bronx and the Bronx siting itself implies the opposite. In an underserved area, the status quo full price already includes both bodega markups and the time cost of reaching a real supermarket; the access I mentioned above may not apply here. If time is a margin when you're modeling queues, it's a margin in the counterfactual too.
One problem with that is if the discounted store takes a longed time to wait in line then you may want to buy everything there since you've already invested time in waiting in the checkout line.
not spoiled; not a brat. you should not make ad hominem attacks on people you know nothing about but disagree with something they said. you should engage in honest fact based debate
Er...go fuck yourself id your idea of "honest fact based debate"? Man who shops in NYC at cheese shops & butchers says he's not spoilt. And having claimed that's what everyone does thinks he's Everyman. You have no idea how people on low incomes shop.
before there were supermarkets there were specialty shops. there were butchers. all they sold was meat. there were fish mongers; all they sold was fish. Not all there customers were rich or even middle class. some people bought the chuck and some the sirloin. But they were assured of quality and they had a relationship with the proprietor. so if that is abhorrent and elitist to you, i think you should reflect
I wonder: can the government stores' subsidies be entirely covered by the absence of rent and taxes? If so then (a) it might work, and (b) it says a lot about the level of rent and taxes in NYC.
What's also stupid is that there are no food deserts in NYC. It would be simpler to just directly subsidize one existing grocery in each borough. But then he couldn't claim credit the same way. It would also emphasize that he's subsidizing prices for everybody, rich and poor.
Someone ought to ask him why he doesn't subsidize SNAP purchases only.
It's not about claiming credit. The point of this is government ownership. Yes, it would be simpler to just write people checks to buy groceries, but that's not seizing control of the means of production.
He's a politician, of course he wants credit. The only thing he believes in is himself, he wants to be in control, and socialism provides more opportunity to be in control. Statists of all stripes want the same thing: a strong centralized government with them in charge.
All good points. So what is the best (not necessarily socialist, but consistent with market principles) way (if any) for a city government to increase affordability of basic groceries for the poor?
I think the author might have missed a potential other point in the future store operating contract: I would image it will have clauses stipulating minimum staff pay, various hiring quotas, limits on ability to let staff go. All of these would likely negate implicit subsidies from the City and reduce competitiveness.
Can you help me understand the first bit on the basket price? Why would operators raise prices of the non core half? If the subsidy reduces fixed costs wouldn’t they have no need to compensate for the reduced contribution margin? Or at least some equilibrium between 85 and 100 bucks for the whole basket?
My recollection of NYC includes significantly inefficient small neighborhood groceries with expensive, often moldy, goods. Assuming city-sponsored bypasses for the size and permitting costs, I wouldn't be surprised to see the stores running at a profit and offering a discount. Now, this would be more of an indictment of the regulatory environment in NYC than a success for public grocery stores....
It’s been a long while since I lived in nyc but I used to go to several stores when I shopped in the weekend. I was not price sensitive then but went to different specialty place for meat and cheese and fish etc. But in your example why wouldn’t a consumer just buy the 30 % discounted items and then go somewhere else for the other stuff? Good for the consumer but has time and transportation costs. But bad for the the Mamdani store 🏬
Yeah, I live in NYC and this point is spot on. Lots of (most?) people here don't buy a basket, they assemble one. My neighborhood has two supermarkets, several fruit stands, a few bodegas, and you can bus, bike, or take the subway to any number of other specialty shops, other stores, etc. Marginal transport cost between stores is a block, which is probably the lowest in the country. Cherry-picking the pinned items and buying the rest elsewhere is nearly frictionless. Of course this cuts both ways: it also means the operator's economics might be worse than you're assuming.
I think scale is key here. You raise scale as an efficiency question but not as a market-structure one. Exit-then-market-power needs a footprint that isn't here. We're talking five stores against 8.5M people.
I like the Barzel point (I mean, I do read this substack aferall). Measurement costs are the binding constraint, but to me this reads as a design spec more than an objection. The city could price this into the RFP process by saying contractors have to have auditable in-stock rates, produce quality standards, checkout wait targets, and so on to get at some of the Barzel stuff.
The other thing is the counterfactual. This model puts an efficient rival at the other end of the neighborhood segment. The whole point of announcing this in the Bronx and the Bronx siting itself implies the opposite. In an underserved area, the status quo full price already includes both bodega markups and the time cost of reaching a real supermarket; the access I mentioned above may not apply here. If time is a margin when you're modeling queues, it's a margin in the counterfactual too.
One problem with that is if the discounted store takes a longed time to wait in line then you may want to buy everything there since you've already invested time in waiting in the checkout line.
Because most people aren't spoilt brats shopping for French cheese. Duh.
go fuck yourself
As I said, spoilt brat.
not spoiled; not a brat. you should not make ad hominem attacks on people you know nothing about but disagree with something they said. you should engage in honest fact based debate
Er...go fuck yourself id your idea of "honest fact based debate"? Man who shops in NYC at cheese shops & butchers says he's not spoilt. And having claimed that's what everyone does thinks he's Everyman. You have no idea how people on low incomes shop.
before there were supermarkets there were specialty shops. there were butchers. all they sold was meat. there were fish mongers; all they sold was fish. Not all there customers were rich or even middle class. some people bought the chuck and some the sirloin. But they were assured of quality and they had a relationship with the proprietor. so if that is abhorrent and elitist to you, i think you should reflect
I wonder: can the government stores' subsidies be entirely covered by the absence of rent and taxes? If so then (a) it might work, and (b) it says a lot about the level of rent and taxes in NYC.
What's also stupid is that there are no food deserts in NYC. It would be simpler to just directly subsidize one existing grocery in each borough. But then he couldn't claim credit the same way. It would also emphasize that he's subsidizing prices for everybody, rich and poor.
Someone ought to ask him why he doesn't subsidize SNAP purchases only.
It's not about claiming credit. The point of this is government ownership. Yes, it would be simpler to just write people checks to buy groceries, but that's not seizing control of the means of production.
Ya know … I’m just quibbling. We’re saying the same thing, just differently.
He's a politician, of course he wants credit. The only thing he believes in is himself, he wants to be in control, and socialism provides more opportunity to be in control. Statists of all stripes want the same thing: a strong centralized government with them in charge.
All good points. So what is the best (not necessarily socialist, but consistent with market principles) way (if any) for a city government to increase affordability of basic groceries for the poor?
Giving money to the poor would seem like the simplest way, whether you're a city government, a charity or a private individual.
What a waste of an assessment due to the missing of the point.
Maybe do a few on economics of Trump’s unprecedented corruption??
May I coin a term for this concept? Foodwank.
So the private grocers will just stop stocking rice and beans and use the shelf space for chips, soda, and candy?
I think the author might have missed a potential other point in the future store operating contract: I would image it will have clauses stipulating minimum staff pay, various hiring quotas, limits on ability to let staff go. All of these would likely negate implicit subsidies from the City and reduce competitiveness.
Can you help me understand the first bit on the basket price? Why would operators raise prices of the non core half? If the subsidy reduces fixed costs wouldn’t they have no need to compensate for the reduced contribution margin? Or at least some equilibrium between 85 and 100 bucks for the whole basket?
Oh. Is it because the operator is private, so why the heck wouldn’t they?
My recollection of NYC includes significantly inefficient small neighborhood groceries with expensive, often moldy, goods. Assuming city-sponsored bypasses for the size and permitting costs, I wouldn't be surprised to see the stores running at a profit and offering a discount. Now, this would be more of an indictment of the regulatory environment in NYC than a success for public grocery stores....
They will either fail outright because they cost too much or they will be constantly out of goods. In either case they will be fucking stupid,
Mamdani would have been better off getting a Walmart Superstore to open in NYC.