If you've ever been to Fenway Park in Boston, then you know there's nothing better than those Italian sausages sold by sidewalk vendors on Yawkey Way and Lansdowne Street. Granted, we may not know what's inside those sausages, but so long as we pretend that we've never read Upton Sinclair's The Jungle, then we really don't care about their ingredients and instead simply enjoy their taste. The same phenomenon undoubtedly take places around Yankee Stadium, Wrigley Field, and all of the other great ballparks.
But who gets to decide where those sidewalk vendors position their food stands? Is there a formal legal structure, such as zoning laws or a system of licenses, or is there an informal mechanism, such as who gets their first or is who is usually there? Or is there a formal structure that is ignored in lieu of an informal one?
Professor Gregg Kettles of Mississippi College School of Law addresses these types of questions in his paper Formal Versus Informal Allocation of Law in a Commons: The Case of the MacArthur Park Sidewalk Vendors. Gregg, who resided in Los Angeles before moving to Mississippi, conducted an empirical study of sidewalk vendors on Los Angeles' MacArthur Park, which features both illegal and legal/licensed vendors. He found that the "illegal" vendors were far more profitable and organized in their trade, which he explains as consistent with the rational allocation of property rights in a commons:
Each licensed vendor was one of more than thirty graduates of a special government-mandated vending training program, but only a halfdozen of them bothered to show up on the sidewalk on a typical day. Meanwhile, across the street, where vending is against the law, there was a buzz of activity, which continues today. The city enforces the law against illegal vending only sporadically. Soon after law enforcement leaves the scene, illegal vendors re-emerge like flowers after the spring thaw. Dozens of illegal vendors hawk their wares on busy sidewalks that have become a bazaar where anything that can be sold from a cardboard box, a blanket, or a suitcase is there for the asking. Why didn’t more vendors go legal? Why did the legal district fail? Despite efforts to stamp it out, why does illegal vending continue to flourish?Particularly given today's debate over immigration policy and protection of our borders from "illegals," I find it interesting that spontaneous cooperation emerges among otherwise-divergent sidewalk vendors--I guess we should never understimate the power of shared opportunities to bring people together, a recurring theme no matter how long one has been in this country. This paper may be downloaded for free from SSRN.
The answer lies in part in property rights. The success of any vendor depends on finding a good spot from which to vend, and choice spots are highly coveted and scarce. The legal vendors in MacArthur Park and the illegal vendors across the street both sell from land that is traditionally open to the public at large—a commons. But how that land is allocated is dramatically different. In MacArthur Park, a system of allocating space among the legal sidewalk vendors who operate there was formally adopted by the city. Across the street, a completely different system for allocating scarce sidewalk space was adopted by illegal vendors on an informal basis. It is the formality of one property system and the informality of the other that substantially explains the different outcomes in these two parts of a commons . . .
Self-interested strangers have coordinated their vending activities to maximize the value of the sidewalk. They have done this not just in the absence of government help, but in the face of government hostility. These illegal vendors developed wealth maximizing order not in the law’s shadow, but rather in its absence.
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