Thread on Amazon location decisions.
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In the long run, Amazon is at a disadvantage in dealing with regulation. Once it has made a large fixed investment in a city, it may face substantial costs to relocate. A city may be able to extract large concessions from Amazon with less resistance, at that point.
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For example, Seattle tried to deploy a (my view) punitive tax on Amazon recently. The city council was particularly cack-handed about this, and ended up withdrawing the measure; but it's illustrative of the sort of power a city might try to deploy against an incumbent firm.
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HQ2 reads to me as Amazon's attempt to deal with this longer-term political risk in several ways. First, it's a strike at Seattle specifically for lashing out at Amazon. Further, it sends a message to other jurisdictions that attempts at extraction will be rebuffed forcefully.
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Finally, it gives Amazon additional flexibility in the allocation of its workforce. If a city attempts extraction in the future, Amazon can (more easily) move existing or future jobs to another location. This may deter extraction attempts.
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Amazon is a large enough target at this point that it needs to seriously consider political risks, and HQ2 seems to me (casually observing) to be a smart way of doing this.
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My hunch given the media reaction is that doing it so *publicly* was a bad move. Everyone hates big firms, apparently, and if they're concerned about political risks the best move might be to stay low-key. The big stick would have been enough. /thread
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It probably isn't, because this tactic legitimizes similar carve-outs for many other businesses (e.g., sports stadiums) where the density/network effect argument appears to make little sense. Unfortunately, taxes are not decided by disinterested benevolent planners.
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Hm stadiums have been doing shit for ages though? Not sure Amazon is spurring that. Empirical question though, it's plausible
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It definitely is not. It creates large-scale distortions in favor of mobile factors of production.
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Hmmmmmmmmmmmmmmm Hard to get concessions when production is mobile though right?
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