The Dubious Economics Of Convention Centers

A blog about business and economics.
Jan. 5 2012 1:50 PM

The Dubious Economics Of Convention Centers

A number of readers have asked what I think about New York Governor Andrew Cuomo's call to sell the Javits Center in Manhattan and build the world's largest convention center out in Queens. If this is a good idea—which it probably is—then it's simply because the merits of selling the Javits Center exceed the demerits of building a new convention center.

I may expand on this for a longer piece at some point, but the question about convention centers is where's the market failure? If the benefits of additional demand for hotel rooms exceeds the cost of building the convention center, then why don't hotel operators just build the convention center? Indeed, you see that it's extremely common for hotel operators to integrate conference facilities into their proprerties for exactly this reason. These facilities tend to be relatively small compared to convention centers because, presumably, that's what makes the cost and revenue curves line up. Someone needs to explain not just why convention centers have ancillary benefits, but why those benefits are so unusually hard to internalize that they justify subsidies. I would say that in high-rent cities, it's actually residential housing that has the hard to internalize benefits since actual residents are a good deal more mobile than conventioneers. Meanwhile, many cities—including the one I live in—appear to me to have a perverse policy of taxing hotels heavily and then deciding that the tax revenue associated with hotel occupancy justifies subsidizing hotel construction.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.


The World

How Canada’s Shooting Tragedies Have Shaped Its Gun Control Politics

Where Ebola Lives Between Outbreaks

Gunman Killed Inside Canadian Parliament; Soldier Shot at National Monument Dies

Sleater-Kinney Was Once America’s Best Rock Band

Can it be again?

Paul Farmer: Up to 90 Percent of Ebola Patients Should Survive

Is he right?


“I’m Not a Scientist” Is No Excuse

Politicians brag about their ignorance while making ignorant decisions.


Driving in Circles

The autonomous Google car may never actually happen.

In Praise of 13th Grade: Why a Fifth Year of High School Is a Great Idea 

PowerPoint Is the Worst, and Now It’s the Latest Way to Hack Into Your Computer

  News & Politics
Oct. 22 2014 9:42 PM Landslide Landrieu Can the Louisiana Democrat use the powers of incumbency to save herself one more time?
Continuously Operating
Oct. 22 2014 2:38 PM Crack Open an Old One A highly unscientific evaluation of Germany’s oldest breweries.
Gentleman Scholar
Oct. 22 2014 5:54 PM May I Offer to Sharpen My Friends’ Knives? Or would that be rude?
  Double X
The XX Factor
Oct. 22 2014 4:27 PM Three Ways Your Text Messages Change After You Get Married
  Slate Plus
Tv Club
Oct. 22 2014 5:27 PM The Slate Walking Dead Podcast A spoiler-filled discussion of Episodes 1 and 2.
Brow Beat
Oct. 22 2014 10:39 PM Avengers: Age of Ultron Looks Like a Fun, Sprawling, and Extremely Satisfying Sequel
Future Tense
Oct. 22 2014 5:33 PM One More Reason Not to Use PowerPoint: It’s The Gateway for a Serious Windows Vulnerability
  Health & Science
Wild Things
Oct. 22 2014 2:42 PM Orcas, Via Drone, for the First Time Ever
Sports Nut
Oct. 20 2014 5:09 PM Keepaway, on Three. Ready—Break! On his record-breaking touchdown pass, Peyton Manning couldn’t even leave the celebration to chance.