New York City Should Not Run a Grocery Store
No one likes high grocery prices. One New York City mayoral candidate thinks the solution is to open city-owned and operated grocery stores.
Earlier today, The New York Times reported on New York Assemblymember Zohran Mamdani’s campaign trail proposal to open one city-run supermarket in each of New York City’s five boroughs.
“Everywhere I go, I hear New Yorkers talking about the outrageous prices of groceries,” he told the Times. “This is a bold and workable plan.”
Supporters say that a city-run grocery store could offer cut-rate prices if it were provided with free or discount land from the city and property tax exemptions, and if it bought in bulk.
Private grocery stores already purchase in bulk from established networks of suppliers, so it’s not clear how that would give a city-run grocery store a leg up on price competition.
With that caveat, it is technically possible that showering enough tax exemptions and land giveaways on a city-run grocery store would enable it to sell its wares at below-market rates while still being operationally in the black.
Even if we steelman the chances that a city-run grocery store will be successful, that success will generate lots of knock-on problems.
If the city-run grocery store’s prices are sufficiently below the rest of the market, one should anticipate shortages. Customers’ demand for cheaper groceries would outstrip the store’s ability to supply them, leading to queues and empty shelves.
This would be exacerbated by the arbitrage opportunity the city would be creating for entrepreneurs to buy discount products in bulk and resell them at near-market rates on the secondary market.
The city’s store would effectively become a subsidized wholesaler that does little to lower the retail price of groceries for the residents it’s intended to serve.
The city could prev
Article from Reason.com
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