18 Feb 2011

Cities as centers of competition

In this review, I said
Why do companies evolve so quickly to give us what we want? Because markets reward those who do the most good (quality goods and services at low prices) for the most people.
Then I read this review of a book praising life in cities, which suggested a clear extension of my comment on market competition, i.e., cities are full of interesting people and innovations delivering the good life to urban residents because the urban market maximizes the rewards to innovation. Buildings, restaurants, clubs, stores and other businesses all compete for residents' attention and money, so they are constantly driven to improve.

Compare that happy result to cities (or military bases or shopping centers or college campuses) that are centrally planned and built. They can be ugly and non-functional to the extent that they do not have to compete with other areas for residents' attention.

BTW, this whole discussion fits something that Adam Smith said over 240 years ago:
the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power, or, in other words, by the extent of the market.
I always thought of extent in the horizontal sense, but it's obvious that it really refers to the population, which is denser in cities.

Bottom Line: There's more cool stuff in cities because there are more people to produce and consume it.