Most people have heard the phrase "Bolivar can't carry double."

Even if they have never read the O. Henry story where it came from, they understand its meaning: sometimes there simply isn't enough room for everyone.

In the original story, two outlaws escape after robbing a train. They flee on a horse named Bolivar. Soon the exhausted animal can no longer carry both riders. One outlaw realizes the obvious. Bolivar cannot carry two people any farther.

Fortunately, contemporary economics is far less violent than O. Henry's story. Yet the underlying lesson appears almost everywhere.

Businesses compete for customers. Governments compete for limited tax revenue. Investors compete for profitable opportunities.

Every economy is built on the same uncomfortable reality: resources are limited.

And sometimes, markets have their own version of Bolivar.

Markets Have Weight Limits

Imagine opening another coffee shop in a small Canadian town with only a few thousand residents. The existing cafés already satisfy most local demand. Your coffee may be excellent. Your staff may be friendly.



Your prices may even be lower. You still might fail. Why?

Because demand itself has limits.

Economists call this market size. Businesses sometimes discover that success depends less on offering a better product than on entering a market large enough to support another successful competitor.

In this case, the market—not the entrepreneur—is the limiting factor. Bolivar simply cannot carry another rider.

Competition Doesn't Always Create More Winners

Competition is usually good for consumers. Better prices. Better service. Better innovation.

For businesses, however, competition often produces the opposite result.

Consider airlines. A heavily traveled route between New York and Toronto can profitably support several carriers because millions of passengers travel every year. A much smaller regional route may only generate enough demand for one profitable airline. If two companies aggressively co

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