Coffee Shop Equilibrium

Posted on Sat 03 March 2018 in Analysis

Whenever I walk into a coffee shop in Boston, it is inevitably packed. Glancing around, they seem to be mostly filled by students and the occasional businessperson. I think that there is an interesting question at hand: is there a shortage of coffee shops in the Boston area?

As an Economist, I always have equilibria on my mind. If I believe that the coffee shop equilibrium is always having a place to sit and if the coffee shops are always full, this indicates that we have a shortage of coffee shops in the city of Boston.

But then I began to think - while the coffee shops are filled with people, I’m not exactly sure how many of them are making any money. Indeed, many tables only have one or two drinks on them; not necessarily big spending items. While talking informally with the staff at a few of these shops, I realize that the students often purchase a tea and sit at the coffee shop for hours.

Personally, I fit in with the majority; I have only purchased a tea so far. Perhaps this implies that we are at a coffee shop equilibrium; population does not necessarily imply profitably.