Economics 101: Supply and demand in a free market society

It’s not uncommon for the city to receive requests — and even demands — from citizens related to commercial development within our community. People plead, “Don’t let another fast-food restaurant come into the city,” or they demand, “Bring this restaurant or this store to town.” Such statements prompt a reminder that we embrace a free market economy. That’s a system where economic decisions and the price of goods and services are guided by interaction between people and businesses.

Free markets are characterized by limited government intervention. A retail business is free to choose its location, target market and pricing strategy. While local government controls environmental issues, public safety, zoning, and traffic concerns, we do not control which retailers choose to establish businesses in our community. You, the public, are in control. You make those decisions. A business will choose to come, or not, based on what you want and are willing to pay for.

In a free market system, businesses determine the flow of products in an area via the law of supply and demand. Resources, including land, are privately owned. A free market exists because people own the resources they sell. The owners have complete control of their resources, which gives them the power to enter into contracts.

The government does not control how resources are allocated or exchanged in the economy. The city has no right to deny development requests if they meet development criteria. Businesses come simply because they can make money. Yes, the city introduces our community to many economic opportunities in the retail, commercial, medical and industrial realms. But in the end, each business self-determines if, when and where it will open shop.

With the Great Recession and a pandemic followed by a weak economy, high inflation and high construction costs — coupled with struggles to find employees — businesses now take a very cautious approach to new opportunities. However, rest assured, they are coming.

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Office of the City Manager
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