Consumer Shake-down

Posted on August 31, 2006 | Author: Noah Clarke
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So called big box stores like Wal-Mart, Ikea and Costco have become the favorite whipping boys of some policymakers. The City of Phoenix is considering new zoning regulations that would make it tougher for these retailers to set-up shop.

If bureaucrats were the only people who suffered the effects of this commercial snobbery, such measures wouldn't matter much. Unfortunately, in this case, all consumers suffer.

For instance, estimates show that groceries at a Wal-Mart superstore can be up to 25 percent cheaper than at other supermarkets. This is a savings for any family, and it's especially important to lower income families who spend proportionally more on groceries.

Better still, when large retailers move into a neighborhood, competition compels other stores to lower their prices by an estimated average of five percent. Even if you never shop at Home Depot or Ikea, chances are you still benefit from price reductions in nearby stores.

This is also about jobs. These stores employ upwards of 100,000 people in Arizona. They offer competitive salaries for low-skilled workers, and full-time employees often have access to performance-based bonuses, 401(k) retirement plans and low cost health care.

City officials should work on making it easier for businesses to open, not harder. Wrapping big boxes in more red tape is bad economic policy.

Noah Clarke is an economist with the Goldwater Institute Center for Economic Prosperity.

Key Links:

-National Center for Policy Analysis: Thinking Outside the Big Box
-Massachusetts Institute of Technology: "Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart"
- Arizona Republic: "Limits sought on giant retailers"

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