Competition, complementarity and ethnic businesses
On the continent where everybody was an immigrant, in a city with more skin colors than there was ever in Babel tower, we discuss the evidence that ethnic competition is actually good for migrant self-employment. Whatever management wizards tell you, competition is bad for business, it drives profits margins down and if it has a positive effect on business it is only because firm managers seek out witty ways to avoid competition. Meanwhile, it was often argued that migrant enclaves constitute an advantage for the members: social ties, cultural capital, and generally higher level of trust create space for improvement in economic outcomes. This brings about a question: if you're of Italian origin, live in NYC and want to run business in this city, should you locate it in Little Italy (everybody knows that Italian businesses are there, like the Diamond Street in Antwerp), or should you locate outside this ethnic enclave, to avoid other Italian businesses putting pressure on your profits? Turns out, you'd be much better of in Little Italy.
Paper soon to follow, for the time being, the slides