Whereas increased output is not necessarily a plus for some forms of non tradable sector activity, especially when it is organized in a secondary market position which is dependent on external revenue (such as knowledge use). Here, increased market output and/or product diversity may actually translate into revenue dilution, since time and place linked product cannot be replicated by means of the same (identical) time and place. As I have argued in previous posts, new forms of organizational capacity are needed, to generate similar forms of product which expand the marketplace without directly competing with these fixed scarcities. Yet ultimately, no person - or institution - should have to be completely dependent on the fixed scarcity of (one's own) time value or real estate value, as a sole revenue source. Not only does this form of ownership create excessive vulnerability, but also a natural impulse to decrease additional marketplace formation if it "competes" with personal ownership capacity.
Too many people and institutions are now dependent on revenue that is directly linked to the fixed scarcities of time and place, which understandably leads to widespread protection of market definition and share. Since these crucial differences in ownership incentive are not well understood, they are adversely affecting aggregate output, so as to negatively impact tradable sector capacity. Meanwhile, the forms of capitalism which are already well aligned to embrace competition, have become confused with negative "competition", which instead seeks to "crush" those who dare "threaten" the fixed scarcities of time and place.
These differences in ownership incentive are important, at a very basic economic level. Without the organizational capacity that would encourage non tradable sector output and product diversity, future growth potential could be jeopardized. Organizational factors in primary and secondary market positioning matter, for marketplace outcomes. In the meantime, some of today's secondary market patterns will continue to diminish marketplace capacity, due to NIMBY responses re fixed product scarcities as aligned with time and place. Unfortunately, the way institutions now approach these fixed scarcities, also plays psychological havoc with the public psyche.
But how does one know, whether a secondary market position is aligned so as to prompt the suppression of potential aggregate output? It depends on whether ownership is mostly in terms of fixed scarcity product limits (time and place), or if ownership more closely represents product in a related capacity. An apt illustration of the difference, comes from a post by Arnold Kling (re higher education), in which he stated:
The Kling theory of Public Choice is that public policy will always choose to subsidize demand and restrict supply.Indeed, plenty of examples come to mind, since government economic activity tends to be closely linked to product which includes fixed scarcities - particularly time linked healthcare and place linked real estate/housing. But supply of education isn't exactly limited. What gives? As some of Kling's commenters noted, the subsidy (which increases the cost of access) is mostly a response to the limited platform of participation, as represented by the best educational institutions. In this instance, it's the platform for knowledge use participation, which is the most obvious fixed scarcity, in terms of productive agglomeration at an aggregate level.
Additional options for higher education, are not unlike other secondary marketplace components which exist in abundance - particularly financial activity. Secondary markets such as these can afford to be competitive and expansive in outlook, because they serve as further support for economic access, instead of access as it is actually put to use in the marketplace. And even though financial activities have at times fallen victim to their own excesses, they have nonetheless proven capable of expanding the output of general equilibrium in productive ways. In this sense, they are a positive association for competition that one may not always expect.