Saturday, September 09, 2017

Amazon's RFP

Amazon wants a second headquarters. But where? Near or far? Reasons for nearby expansion involve scale economies but (as always) there can also be scale diseconomies -- including the group-think that can set in.

Amazon has invited cities to bid for the plum. Here is the RFP. Not that they have asked me but I would suggest a place with light-touch and flexible land use regulations.  The fact that tough regulations show up as slow construction and housing affordability problems is well known. Wendell Cox (and many others) have documented the link many times.

But there is more. Amazon understands supply chains. Whenever I cite value chains, I add that there are chains for things and chains for ideas. We are all involved in many of these and choose locations in light of many participations (as buyers as well as sellers).

Cities are the spatial realizations these choices: the spatial realizations of large numbers of supply chains.

For Amazon (any company) and the host city to do well, it must be a place where supply chains can be formed -- and re-formed as necessary.

An improved Amazon RFP might include a way to tell local officials that ham-fisted land use regulations are not beneficial or promising.

Time to reiterate that this is not a matter of being "pro-business" which is often synonym for an open door to crony capitalism.  Rather it is clearly pro-market.  Start calling the latter pro-people in this age of tweets and shortened attention spans.