WalMart pulls the Stadium Stunt


Using leverage and the force of law to cut out competition
Stephen Bainbridge tells us that WalMart doesn't always play fair.
When Wal-Mart plans a new store, it typically asks local and county governments for an array of benefits, principally in the form of various economic development subsidies:
• Infrastructure assistance in the form of new or expanded roads and utilities servicing the store location.
• Sales tax abatements.
• Property tax abatements.
• Income tax credits.
• Enterprise zone treatment for the store location.
• Eligibility for job training programs.
• Eligibility for tax exempt industrial revenue bond financing.
• Economic development loans and grants.

This is an example of what I call the Stadium Stunt. A new business creates a demand for city services, and then negotiates the cost of those services away. Other businesses and locals in the area end up bearing the increased cost.

This is harder to pull off in an area that isn't densely settled.

It's only possible when cities and other local governments are willing to cave in order to get the business here. Well, there is no such thing as a free lunch. With the Stadium Stunt, costs are just transfered, which raises the cost of doing business.

Looks like Warren Meyer over at Coyote Blog caught the same scent I did.

— NeoWayland

Posted: Thu - September 14, 2006 at 11:42 AM  Tag


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