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Supply can drive demand

In Puerto Rico there were a few movie theaters: one in each mall, a few independents here and there, and the occasional chains. City theaters which didn't have access to parking died out as they did in most of America, but overall the segment was doing well. Then Plaza decided to build a lot more theaters. I remember when the theater in Plaza was only on the third floor next to the food court close to Sears and on the opposite side from the Gonzales Padín/Borders area.

After college in those blighted days that I was unemployed in Puerto Rico with my Princeton degree (It looks so nice on the wall...) and lacked money to gas my car sometimes I begged for car rides from friends. One time a friend of mine, his girlfriend and I went to catch a movie, and I asked him for a ride since he lived near me. I ended up saving his car from getting robbed that night but more on that later.

So Plaza las Americas the central mall in San Juan, decides to double the movie theater capacity even though their theater capacity was never over full. I don't know the exact figure but let's say 85% capacity. True there were lines on Friday nights for movie tickets but that's because everybody came around the same time. But something funny happened when Plaza opened the new theaters next to Borders. The demand for going to see movies surged. Supply drove demand, though if you read traditional economics it should be the other way around. Demand should drive up supply. As people want to see more movies theater owners respond by building more theaters. But in this case more theaters were built and capacity remained at around 80% even though the quantity of theaters had doubled. So more theaters created more theater-goers.

Now funny thing Health Care works the same way. Many doctors in an area should by traditional economic logic drive health care costs down as they compete for patients but the opposite happens. With more doctors you end-up with more follow up appointments, more procedures. People decry the coming scarcity of primary care physicians but I wonder if trying to fix this by getting more doctors only makes the problem worse.

So back to the car theft story, after watching the movie which I don't remember which it was but it wasn't all that good, I was hungry and went to the Burger King, this if you're not privy to it, is a bit of an inside joke with my friend Jose Luis. He is one of this eat big once and be fine the rest of the day. I'm a snacker. I eat pretty much all day, but small amounts. I'm almost always at least a little hungry. So the joke is that I get really really hungry and we must eat, we MUST, and we stop and I'll have three bites and be done. Jose Luis would just look at me with a mixture of impatience and disbelief. By now he was used to my almost pregnant woman like cravings and he waited for me to get my snack at Burger King. I ordered some chicken tenders and waited (no joke) more than half an hour for them. Which by now had my friend and his girlfriend pissed off at me, and me sheepishly offering to just forget the food and go. Finally I get my snack (I think they went, caught the chicken, skinned it and cooked it) I eat and we're on our way. I get dropped off and a few minutes later I get a call explaining how their home had just been robbed and had they'd been there they'd have probably gotten their car stolen. Such is life in Puerto Rico.

But now the food court and the theater are nowhere close to each other.




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