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    1. eigenrobot‏ @eigenrobot 13 Nov 2018

      Amazon is a huge company that opens plants--offices, data centers, and so on--in many locations. When it opens these plants, it faces several considerations.

      1 reply 0 retweets 6 likes
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    2. eigenrobot‏ @eigenrobot 13 Nov 2018

      First, it has ceteris paribus preferences about where to build based on operational considerations. Treat these as fixed. Next, it must consider political issues. What taxes will it face in the current environment? What taxes and political burdens will it face in the future?

      1 reply 0 retweets 6 likes
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    3. eigenrobot‏ @eigenrobot 13 Nov 2018

      For their part, cities hosting Amazon plants can often expect to benefit from their presence. Amazon is large enough that it spawns entire tech ecosystems where it hires, and knowledge spillover in dense urban areas is a well-documented phenomenon.

      1 reply 0 retweets 5 likes
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    4. eigenrobot‏ @eigenrobot 13 Nov 2018

      In the short run, Amazon can choose where to open these facilities, and has every incentive to request tax advantages from host cities. Cities basically compete with tax breaks in order to obtain. secondary benefits from Amazon. This is *probably* healthful and efficient.

      3 replies 0 retweets 4 likes
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    5. eigenrobot‏ @eigenrobot 13 Nov 2018

      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.

      2 replies 0 retweets 7 likes
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    6. eigenrobot‏ @eigenrobot 13 Nov 2018

      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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    7. eigenrobot‏ @eigenrobot 13 Nov 2018

      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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    8. eigenrobot‏ @eigenrobot 13 Nov 2018

      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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    9. eigenrobot‏ @eigenrobot 13 Nov 2018

      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.

      3 replies 0 retweets 8 likes
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    10. This Tweet is unavailable.
      eigenrobot‏ @eigenrobot 13 Nov 2018
      Replying to @bobpoekert

      I think that's what they're moving toward here?

      3:37 PM - 13 Nov 2018
      0 replies 0 retweets 0 likes
        1. This Tweet is unavailable.
        2. eigenrobot‏ @eigenrobot 13 Nov 2018
          Replying to @bobpoekert

          That seems good but also tech workers have strong locational preferences, also the intrafirm knowledge spillover issue I think?

          0 replies 0 retweets 1 like
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