Sunday, March 4, 2012

The Law of Unintended Consequences

Outcomes that are not the outcomes intended by a purposeful action. That sounds like a reasonable definition of "The Law of Unintended Consequences". Eleven years ago, Indiana legislators passed a law preventing a dealer from locating a new dealership within a six-mile radius of another dealership of the same manufacturer. 

Summit City Chevrolet, in Ft. Wayne, has filed a court action to block Kelley Chevrolet from moving to a new site. But the new site, while within the six miles radius, is further away from Summit City Chevrolet than their current site. It would be reasonable to assume that, when they passed the original law, Indiana legislators were trying to protect dealers from manufacturers allowing others dealers to move in on established territories after dealers have invested in those areas.

But, in a textbook example of the law of unintended consequences, the law also prevents a dealer from moving his store to a new location that is further away from another dealership than his current site.

Now Indiana legislators are considering HB 1171 which is bill intervening in the spat between the two dealers. Senator Jim Smith said that Kelley Chevrolet is asking the General Assembly to pick winners and losers. He voted against the bill.

It doesn't seem to me that the legislature is the venue for this dispute. As the saying goes, "Be careful what you ask for."

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