Tuesday, March 10, 2009

The Economics of Vegas

One of the best things about being a GMU economist is that you look at the world differently. This past week, I have been at the Annual Public Choice Society meetings in Las Vegas and several things about the local economics have intrigued me. Here is a sample:
  1. Why is the law against public intoxication non-existent here? People can buy drinks and walk around with them on the streets and will not be arrested. How have the Casino lobbies worked this out?
  2. Is there collusion between the different Casinos to prevent entry into the Casino market? I personally do not believe there is, but a cab driver suggested it to me and I want to know the economics behind it. 
  3. The laws against solicitation are also different here. Why and how did the lobbies work that out? 
  4. How big are the profits and rents in the adult entertainment industry? There are several things to do in Vegas and how do Casinos keep their business from eroding due to competing entertainment activities?
  5. Every Casino and Hotel has free some free show or the other which has cost a lot of money to establish and continues to cost money to run. For example the Bellagio Fountain, the moving statues at Caesar etc. Why do they have free shows, as in what is their benefit or incentive to spend millions of $$$ to build and operate these. 
I am sure there is a literature on several of these questions. It would be interesting to research the answers to the seemingly obvious and simple observations in Vegas

1 comment:

Richard said...

Concerning your question:
"The laws against solicitation are also different here. Why and how did the lobbies work that out?"

I think I notice an assumption about the historical order in which institutions have become established. Your question may grow from an assumption that the state was already strong, and able to squash a budding institution of solicitation, when solicitation was new, young, and growing.

But the institutions could have evolved in a different historical order. I assume, on the contrary, that solicitation in the territory of Nevada was well established before there was much of a state power at all. For a hundred years or more the tiny government which did exist in the territory did not begin to have enough power to challenge the whorehouses which were run by the wealthiest people in the few, broadly separated, small towns. When the government of the territory did get enough revenue to start to grow a few new departments (new interventions into civil society), already a large proportion of the wealthiest and most influential people in the territory had some property rights in an established institution which relied upon solicitation.

So I propose that a refined view of history would see how solicitation got well established before government had any chance of challenging it. To the extent that government now successfully challenges solicitation, I would guess this challenge is relatively recent. I would predict that the state's challenges to solicitation will continue to grow, incrementally.

For further development of these ideas, see my The History of Free Nations and Gateway to an Altered Landscape: Law in a Free Nation.