Earlier this week, we had occasion to dine at The Globe Restaurant in Rosemont, Ontario, maybe an hour or so NNW of Trono. It was superb -- excellent food and excellent service -- so much so that Ms. Eclectic has now declared it to be her favourite restaurant.*
But the point of this posting comes from a brief historical statement about the Globe:
In the early days, Rosemont boasted four hotels, one of which was the Globe. One night, a fire broke out in the hostelry built where the Anglican church now stands. The wife of the owner of the Globe rose from her bed, and grabbing her husband's shotgun, ran outside in her nightgown and mounted guard over the well — the main source of water for the village, but located on her husband's land. She stood there, daring anyone to fetch water to aid her chief rival for business until the building was past saving. The pump she guarded so valiantly is still to be seen outside — a tribute to the competitive instincts of our forebearers!Interesting that the Globe owner's wife valued a reduction in competition more than the competitor valued saving its hotel. Wouldn't one expect that otherwise the competitor would pay enough to induce her to let them use the water to save the hotel?
Not necessarily. The transaction costs may have been too high -- it may have been next to impossible to make a deal quickly that would stand up in court and not be deemed "unconscionability under duress". Also, maybe they just plain hated each other, and she received considerable utility from seeing the rival hotel go up in flames.
Can you imagine trying that today? "I have a monopoly of the water supply and you can't have any to put out a fire," would not go down well with most politicians, I'm afraid. At the same time, some municipalities do, I've been told (anyone have a reference here?), have private fire departments, and if you don't pay in advance for their protection, they will watch your house burn rather than put out the fire.
Fire protection provides a good example of anticipating risks and deciding to negotiate ways to bear the risks or to pay someone else to bear them. In this case, the competitor could, possibly, have paid the Globe owner in advance for the right to use the Globe's well in the case of a fire. Failing that, the competitor might then have decided to dig its own well or take other precautions... or self-insure, as it apparently did.
*I liked the food, and the service was great, but I have several other "favourites", including The Red Pump, The Albion, McDonald's, and Kelsey's; but remember, I'm the chair of the PLO.