I think you use “value” in a confusing manner. If value is the nominal price then value increases or decreases only if total income increases or decreases. If value is used in the sense I think you generally mean, then that is a largely (overwhelmingly largely IMO) subjective judgement and it’s not clear if buying the car or making the donation a superior outcome.
Additionally, I think the conclusion, seems to needs something said about what the new restaurant owner and workers are doing. If we’re in a zero-sum game then it really should be a wash. If, as generally accepted, markets tend to be positive sum games then we have a case of a smaller share of a larger pie (that is some of the employees will now eat at the first restaurant where as they could not before as they were unemployed, or making less money).
The other observation is about network effects. It used to be that businesses, particularly restaurants type businesses I think, used think they needed to be away from other restaurants. It was a form of spacial competition for demand. But that view has fallen to reality. We we that proximity to other competitors is not that bad and can actually increase total demand for all on the supply side. That seems to be driven by network type effects. Think about the dinning/club districts in cities, shopping mall and their food courts.
Of course there are limits but the simple model of competition don’t really seem to capture the real dynamics of market competition.
Two observations.
I think you use “value” in a confusing manner. If value is the nominal price then value increases or decreases only if total income increases or decreases. If value is used in the sense I think you generally mean, then that is a largely (overwhelmingly largely IMO) subjective judgement and it’s not clear if buying the car or making the donation a superior outcome.
Additionally, I think the conclusion, seems to needs something said about what the new restaurant owner and workers are doing. If we’re in a zero-sum game then it really should be a wash. If, as generally accepted, markets tend to be positive sum games then we have a case of a smaller share of a larger pie (that is some of the employees will now eat at the first restaurant where as they could not before as they were unemployed, or making less money).
The other observation is about network effects. It used to be that businesses, particularly restaurants type businesses I think, used think they needed to be away from other restaurants. It was a form of spacial competition for demand. But that view has fallen to reality. We we that proximity to other competitors is not that bad and can actually increase total demand for all on the supply side. That seems to be driven by network type effects. Think about the dinning/club districts in cities, shopping mall and their food courts.
Of course there are limits but the simple model of competition don’t really seem to capture the real dynamics of market competition.