Freakanomics week turns to look at traditional economics


Welcome back Tao!  

We turned our attention to business today. Why do businesses set up next to each other instead of being spread out through the community to serve the community better?  One reason is to maximize their own profit by taking as much of the market as they can. So keeper your friends close, but keep your enemies closer.  Notice that the free market in this instance is not served by the self interest of the businesses.  The community does not have the resources spread evenly throughout it.  Adam smith was wrong on this count. 

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