The After-Concert Hustle: The Law of Supply

Why there are suddenly 10 pizza carts outside the stadium.

3 min readQuick check inside

The big idea

Higher prices make selling more profitable, so sellers make more. Big profits also attract copycats until the profits get competed away.

When a concert lets out and thousands of hungry fans flood the street, pizza can sell for a premium. At that higher price, it’s worth it for vendors to stay open late and make more. That’s the law of supply: higher price, more quantity supplied. The supply curve slopes up.

Every business has the same basic motive, which is profit. When one business finds a big one, others notice. Remember when frozen yogurt shops were everywhere? Massive profits attract copycats, new sellers pour in, prices fall and the weakest shops close.

That cycle of boom, copycats, crowding and shakeout is how markets push prices back toward the cost of making things. It’s good news for customers and tough news for the last frozen yogurt shop to open.

Spot it in the wild

Coffee shopsWhy is every street getting a new coffee shop? Because the early ones were profitable.
Viral trendsEvery viral product spawns a million copycats within weeks.
ClearanceWhen stores dump products cheap, they’re clearing out supply they can’t sell at the old price.

Quick check

Tap an answer.

A new snack becomes hugely profitable. What usually happens next?

Profits attract new sellers. More supply pushes prices and profits down over time.

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