Why would a lamp shop want to be located next to a whole lot of competition? Wouldn’t it be better to be the only lamp shop in the area? No, because clustering allows them to specialize. Sure, you’ll lose some customers because they can just go next door when you don’t have a lamp they want. But you’ll also gain customers from other stores. Having a big cluster means that when folks in the know want a lamp, they’ll head to your district; with such high traffic, the spillover effects more than make up for the disadvantages of not having a captive audience. As with lamps, so with bars.

how the east village became party district

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