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«Contesting the streets Volume 18, number 1 • 2016 U.S. Department of Housing and Urban Development | Office of Policy Development and Research ...»

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In particular, the GDVA chairman himself was a butcher and wet-goods vendor who was originally supposed to go to the second floor of the market. Instead of following the market zoning code, however, the GDVA chairman led all wet-goods GR vendors to abolish the code and sought help from the city council members to ask the city government to change the original design of the market.

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A problem emerged with trying to squeeze more market booths on the first floor: each market tenant’s vending area became smaller and more crowded, and the market aisles also became narrower.

Every vendor had less space to exhibit his or her goods to customers, thereby hurting the diversity of merchandise mixes the vendors could offer. Worse, being squeezed together with the wet-goods vendors, the dry-goods vendors could not enjoy the positive customer spillover effect from each other. During our field survey, we found that only the wet-goods vendors were still conducting their business on the first floor. All dry-goods market vendors had left the market. Even though the city government had installed inclined moving walkway systems to move customers to the second floor as the ZL market had done, the customer base was not willing to go upstairs without highdemand vendors and full occupancy.

From a game theory point of view, the wet-goods GR vendors shared a common interest in decreasing the overall vacancy rate of the GD public market: lower vacancy rates and a more diverse merchandise mix would draw more customer foot traffic. But the wet-goods GR vendors also had individual interests in staying on the first floor, where the customer foot traffic would be highest.

When, in the initial plan, the number of market booths on the first floor exceeded the number of dry-goods GR vendors who were first assigned there, a few wet-goods GR vendors were assigned to those empty spots. But as more wet-goods GR vendors moved to the first floor, the drawing power of the second floor grew weaker. Then, each wet-goods GR vender would find that, as long as an empty booth was still available on the first floor, to maximize personal interest, he or she should move there to the point until no empty spot was available and to ignore the effects of his or her personal movement on the market.

The net result of this game was that the customer drawing power of the second floor became almost zero, very few UN vendors wanted to move in, and the vacancy rate of the public market has remained high. The market zoning code, the government price support, and the existence of a vendor association that is supposed to act in the interest of the group might have kept wet-goods GR vendors from acting contrary to the common interests of all other prospective market tenants.

Even though such intervention mechanism did exist in the GD market, it did not work properly.

Law and Rigid Bureaucracy In the ZL market case, the street vendor organization—HSVU—had more autonomy in spatially managing its market. In the GD market case, however, the city attempted to foster a street vendor organization, civil servants were still involved, and the city still officially managed the GD market.

Public management entailed more restrictive regulations. The major reason the city government could not provide strong incentives for the wet-goods GR vendors to stay on the second floor was that the law did not allow the city government to do so. The law required the city government to treat every market tenant equally—that is, to treat all market tenants literally in the same way. The Public Market Management Law (PMML) requires that all market booths “managed by the city government” should be rent controlled; a lottery should be used to ensure all market booth locations are equitably assigned; every household should acquire no more than one market booth; the tenant should own and operate his or her booth; and the tenant should not transfer (or sublease) the booth to another person, except for his or her family members.

Cityscape 61Weng and Kim

Therefore, the major incentive strategy for convincing the strongest vendors to relocate to an upper floor in the ZL market case was unavailable in this case. Even though the city government knew that enticing the wet-goods GR vendors to stay on the second floor was necessary for the financial stability of the GD market, the city government, handicapped by the PMML, was not able to offer any benefits to compensate the risks and uncertainty the wet-goods GR vendors might face. Also, because of the PMML, the wet-goods GR vendors were not able to capitalize on their first-mover advantage. They could not select prime locations for themselves, their rent per square foot was not discounted compared with the late-movers’ rent, they received no cash inducement from the city government, and they could not invest in spare market booths to anticipate the possibility of a future sublease income stream.

Furthermore, because civil servants had to obey the system of rules and follow procedural routines to carry out their duties, the management of the GD public market could sometimes become very inflexible. From time to time, the rigid bureaucratic process made the civil servants unable to respond to the sudden shifts in the environment, and it even restricted the civil servants from solving the problem efficiently and effectively.

Discussion The city government used similar relocation strategies in both markets: (1) in situ relocation, (2) user participatory design, (3) two-story markets, (4) modern building facilities, and (5) working through a street vendor organization.

The two major differences between these two cases are (1) scale—the ZL market has 250 booths, whereas the GD market has only 112 booths, and (2) institutional capacity—a vendor organization managed the ZL market, whereas the municipality managed the GD market.

This section discusses why, even though the ZL market strategies were applied to the GL market, the success of the GD market has remained elusive. It also examines what can be learned from these two cases that will contribute to a better understanding of the crucial role that street vendor organizations play in the street vendor relocation process.

The Crucial Role of a Robust Street Vendor Organization A public market can be thought of as a collectively owned resource system, and the market booth is thought of as the unit that each market vendor appropriates from the system. Because the market is jointly provided, maintained, and used by the market vendors, positive externalities can be realized through cooperation, such as higher customer foot traffic and better shopping environments.

Enjoying the higher individual net benefits from joint cooperation requires an institution that can effectively regulate the costs and benefits of each of the members. If the institution either does not adequately disperse the benefit/cost ratios or tolerates free riders, however, the common goods will devolve into a suboptimal and dysfunctional arrangement and eventually collapse (Ostrom, 1990).

Many potential risks and uncertainties exist, however, for the first-mover street vendors into a collectively managed resource of a new public market. Even though a cooperative strategy of moving into the market together maximizes the benefits for all vendors, a prisoner’s dilemma may arise

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in which every street vendor’s dominant strategy is to be a late mover. In the GD case, the leaders of the group went even further to alter the rules for their personal benefit. Credible commitments and strong enforcement of transparent governance rules are two of the main ways to overcome the prisoner’s dilemma. This article shows that solving this synergistic problem involves the creation of an institutional arrangement so the sets of working rules regulating each street vendor’s behavior can be clearly defined, effectively enforced, and mutually monitored.

Scale and Inclusivity The market generally needs to reach a certain scale so it can offer the necessary diverse merchandise mix to retain or expand its customer base. As the size of the market becomes bigger, so does the difficulty of arranging synchronized collective actions among street vendors. What is more, in the case of the ZL market, the diverse merchandise mix is not created only by the HSVU members (that is, the anchor tenants and the ancillary tenants)—the breadth and depth of the products of the ZL market is, in fact, created also by cooperating with many non-HSVU vendors (that is, the informal subtenants). Working with these “outsiders” makes the coordination work of the ZL market even more complex and intricate.

HSVU leaders, however, were able to perceive the potential values that those outsiders could add to the ZL market and devised a complex property-right system to realize them. An institutional approach that conceives a set of rules determining what actions are required, forbidden, or permitted is therefore essential in solving the tricky problem of coordinating collective actions between the insiders and the outsiders during the ZL market relocation process.

Collective Action and Enforcing the Rules of the Game Through market zoning and settling the anchor tenants on the second floor, HSVU was able to convince market tenants to trade off the short-term personal interest (that is, grabbing the booths on the first floor) for the higher future economic return (that is, enjoying the higher property value of their market booths). By creating strong customer drawing power on both the first and second floors of the market, HSVU was able to ameliorate its members’ anxiety and help them gain a more accurate understanding of what to expect from the market. The HSVU leaders followed these new plans by taking second floor booths, while also being compensated by the ability to buy more booths. Therefore, the vendor members can expect all other vendors to follow the zoning scheme accordingly and adopt adherence to the new order.

In the ZL public market, the regular meetings of the opinion leaders of the street vendors serve as a forum for face-to-face discussion of collective problems and potential joint strategies; therefore, all decisions of the street vendor relocation process are made collectively with every player knowing what the other players will be doing. Even though the forum per se may not change street vendors’ dominant strategy of maximizing one’s self-interest, the forum helps communicate the rules of the game.

Furthermore, because the information about compliance rates is available from the regular faceto-face meetings with street vendor leaders, street vendors can acquire the information needed to formulate their future strategic decisions. When they know that more affected street vendors agree

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to comply with the market zoning code, they are more likely to make the same commitment and act accordingly. If no market vendor is found breaking the market zoning code, it is then reasonable for each market vendor to keep complying with the rule.

The Implications of Having Strong Street Vendor Organizations ZL public market’s success can be attributed to its unique booth-leasing strategies and location assignment rules. These rules followed the original socioeconomic structure of the old market— prime locations were reserved for senior street vendors with the strongest customer-drawing power; marketable property rights for booths were developed so the booths could be subleased or resold, hedging the investments of all vendors; and daily booth rentals were retained for floating street vendors to test new markets.

By recognizing and incorporating the existing activities of street vendor organizations, the government is able to make policies that are more resonant with the local conditions and that are more likely to succeed. In return, after the street vendor organization gets the government’s de facto recognition, it can make and enforce the rules itself. The power dynamics between the government and the governed has morphed with greater autonomy and governing power.

Political Capital In some circumstances, the change in power dynamic is so great that the street vendor organization gains even more bargaining power than the government. For instance, when the city government first announced the ZL public market concession bid in 1997, HSVU leaders thought the price of the concession fee was unacceptably high; therefore, they refused to bid. Not until the city government voluntarily lowered the concession fee twice (to 20,000 USD per year) and announced the bid for the third time were HSVU leaders willing to bid on the concession contract. The reason HSVU had the audacity to force the city government to lower the concession fee was that, during that time, no other entity had the ability to relocate the ZL street vendors into the ZL public market. Lacking competition, HSVU had the ability to set its own price.

In other circumstances, when the members of the street vendor organization reach a certain number, the organization leaders wielded political influence over the government civil servants. Again, in the case of HSVU, which had around 1,200 members by the end of 2011 when combining the vendors’ friends and relatives, they comprise a politically significant voting bloc that is strongly motivated to protect HSVU members’ rights and promote their interests. In other words, at this size, HSVU is no longer merely a group of street vendors on the sidewalks. It has become an advocacy group that carries strong political clout in the street vendor policy decisionmaking process.

Capitalizing on the Street Vendor Organizations’ Control of Public Space A strong street vendor organization provides vendor leaders with an instrument to facilitate engagement in higher value-added “commercial property development” activities rather than just laborious, cost-based street vending. For example, in the first case study of the ZL public market,

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some HSVU leaders (that is, anchor tenants) are in the unique positions of “landlord” and therefore are able to receive extra market booth sublease income that is, in fact, more financially rewarding than earnings from running their own vending businesses. In some cases, HSVU leaders can afford to live solely on this alternative source of income.

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