Drinking and dining establishments want to be where people are likely to look for them. And people want to go to places where they’ll find options. Complicated interdependencies and complementarities can arise. The late-night pizza joint’s proximity to the dive bar increases the value of both. Alternatively, you might want to meet friends for dinner in a neighborhood where you’re also likely to be able to grab a drink afterwards. Theaters and live-music venues benefit from proximity to other after-hours activities and also drive customers to bars and restaurants. Forcing the cluster to disperse destroys its value. Preventing new firms from entering the cluster fosters high prices and mediocrity, as underperforming bars and restaurants can essentially free-ride on the rest of the cluster.Providing these kinds of dense networks of related but independent small undertakings is exactly what cities are good at.
Yglesias believes decisions about things like liquor licenses should be made at a higher level, considering the effects on citywide growth and prosperity rather than just neighborhood opinion.Though the voices of residents are very important and shouldn’t be dismissed out of hand, we tend to agree. Even a sluggish economy and a poor job market don’t seem to keep booze out of the hands of young professionals, as a walk through many New York and DC neighborhoods on any day of the week will show you, and nightlife appears to be going strong despite the recession. In the cities, at least, vodka may be the elixir of growth.Read Yglesias’s whole piece here.[Beer image courtesy of Shutterstock.com]