The First-Move Problem
I cannot possibly be the first person to describe this problem, but I’m having trouble finding it anywhere else. If you know of someone else who’s brought it up, please feel free to comment!
Anyway, on to the amateur economics!
I saw someone on facebook recently commenting that the reason they don’t like the idea of providing bathrooms for anyone who needs one isn’t because they’re transphobic (do they ever come right out and admit it?), but because they’re pro-freedom. They just don’t want the government coming and dictating how they live their lives, run their businesses, or spend their money! And, heck, if trans people don’t like one business’s bathroom setup, they’re free to shop elsewhere, right?
Of the bazillion or so things wrongheaded about that, I’d like to pick just one to focus on here and today: the idea that the free market will inevitably provide somewhere else to shop that better meets your needs. In fact, I’m going to stick with the bathroom example, because in the infinitesimal possibility that I am describing this for the first time, I kinda want it to be known as LeRoux’s Bathroom Problem.
Suppose you and I have stores in the same strip mall, which has no bathrooms. At all. This lack of amenities is widely known in the community, and we get far fewer customers than we would if someone- ANYONE- in the mall would just accommodate a commode. Could be another shop owner. Could be the property manager. Heck, an anarchist plumber could swoop in and save the day! Nobody is going to want to shop here until that changes.
Problem is, nobody is willing to pay for the changes. If I go ahead and install a bathroom, your customers are going to flock to my store just for the toilet, blocking my customers, and I’m even worse off than I was before. The property manager is getting rent paid at a rate they seem to like, so they’ve got no incentive to improve the grounds. And the nearest anarchist plumber is three towns over and doesn’t have a phone number because “that’s how they track your pizza orders”. So we all just sit here, at the bottom of a Nash Equilibrium well, feeling very damp.
But hey! At least I’m not the sucker here!
The solution is pretty obvious: regulation. It could come from a government mandate that all stores in strip malls must have bathrooms installed. It could be the property manager electing to raise rents and get more customers flowing in. Maybe we all sign an agreement to pick a part of the county and canvas it to see if the anarchist plumber is hiding out there. Whatever it is, all us shop owners have to collectively submit to a slightly increased cost in order to reap the benefits of a more relieved customer base.
You might think this is unrealistic, hippie-dippie dreaming. But it happens all the time! The Americans with Disabilities Act shoved us able-bodied folk to the side because everyone is a little better off when wheelchair ramps and blue-lined parking spots get installed. Sure, proper environmental care costs money, but it keeps chromium out of the water. And, yes, as long as there are regulators, there is a risk of corruption, but that doesn’t mean “never regulate”, just like the fact that police shoot black people doesn’t mean “never have police”.
It just means we have to keep watching the watchmen.