Why Bezos Should Build HQ2 in Northern Virginia

An article from CNBC ranks the cities that have been selected as top choices for the new Amazon HQ, ranking Northern Virginia a B+. These are the reasons why I think Northern Virginia should receive an A.

There are some missing factors in this analysis. Since businesses in the same industry tend to converge in location (the beach and hot dog stand example from class), Amazon would benefit from the growing concentration of tech companies in Northern Virginia. These companies have began to slowly merge together in Northern Virginia, which makes it an optimal location for the new headquarters because, where there is a great technical presence, there is a great supply of talented technical workers for amazon to feed from. Amazon will also create a positive production externality in the Northern Virginia area. Not only will the creation of Amazon's second headquarters produce a spike in job growth, but it will also help to spike infrastructure growth, since many governments, including that of Virginia, have promised to expand infrastructure as a result of the creation of a new Amazon headquarters, outlined in an article by the Washington post. This, in the long run, will create economic rent for Amazon as a result of the subsidies it receives, because Amazon's resources that they build in Virginia will create a return greater than the opportunity cost of production in the form of tax breaks and infrastructure benefits.

In conclusion, it is likely that Jeff Bezos will build the new head quarters in Northern Virginia because he owns the Washington Post. Since Bezos owns the Washington post, he cares about the people of the organization, causing his utility function to depend on that of the people of the Post, with an alpha level greater than one. This fact is solidified with a quote by Bezos from the Washington Post article: “Ultimately the decision (where HQ2 will be built) will be made with intuition after gathering and studying a lot of data ... you immerse yourself in that data but then you make the decision with your heart.”