Giving Green Grocers First Dibs on Green Cart Licenses

This past week the New York Times reported that some groups representing New York City's Korean-owned small grocery stores object to a proposal to license 1000 fruit and vegetable carts-- Green Carts-- in parts of the city where little produce is consumed. These objectors demand that if any licenses are granted, that grocery store owners be given preference.

Any time the government restricts the number of entrants to a market, the question inevitably arises whether the "right" people are being excluded. Before settling on a licensing scheme for its Green Cart program, New York might want to consider the experience of Los Angeles, California. There sidewalk vending is generally illegal, and has been for decades. About 10 years ago Los Angeles faced growing numbers of illegal vendors and decided to establish a place where they could ply their trade legally, in MacArthur Park. The city made room for as many as 30 vendors, but the number of illegal vendors who wanted to "go straight" far exceeded that. How did Los Angeles pick the lucky 30?

The city required each vendor to complete a multi-week training course and pay licenses and fees amounting to $700 per year. Not surprisingly, only people with some money in the bank could afford to participate. At the time, this made sense. Maybe the ones who could afford it were people who wanted to vend the most and had demonstrable vending skills to raise the capital to participate in the program. Los Angeles got talented people alright. Trouble was, they were so talented most of these legal vendors did not need to vend to make ends meet. Many vendors did not show up on a regular basis to sell. Even on sunny weekend afternoons when neighborhood sidewalks had plenty of pedestrian traffic, not even half the licensed vendors were there to meet them. But they made sure they kept their licenses current. Meanwhile, dozens of illegal vendors continued to ply their trade in the surrounding neighborhood and across the city.

New York City should be careful about how it allocates rights to vend produce on the sidewalk. The use of a licensing scheme will not by itself ensure that the licenses will actually be used by those who obtain them. This risk will be even higher if grocery stores are given preference in obtaining licenses. They may find that vending on the street is less profitable than selling inside, and thus not bother to sell fruit on the sidewalk. Holding one of a limited number of licenses to vend would still benefit the grocer by preventing someone else from vending-- and competing-- in their place. Perhaps the city could stipulate that any license left unused for a certain period would be revocable by the city. Otherwise the city's Green Cart program risks bearing little fruit.