Discuss The Pros And Cons Of Gentrification In Brooklyn

IV. Opinion
The changes in Brooklyn brought pros and cons in the community. Some people disagree with this accelerated transformation because it seems destructive. The reality shows that there are a lot of empty buildings without occupants, because the buyer just bought the building for investment purposes and many of those who do not live there. This rapid and large transformation has forced previous occupants and small business out of the area. It seems that the area is reserved only for the rich, high-end companies and there is no place for the middle and poor and small businesses to live there. Conversely, some people argue that the change is natural and beneficial because it makes New York more attractive.
What is happening is an economic phenomenon. When gentrification occurs, it will change the existing situation. Gentrification refers to shifts in an urban community lifestyle, increasing share of wealthier residents and/or businesses and increasing property values7. It also could displace the small businesses and the middle low-income families.
The effects of gentrification carry a heavy impact to small businesses. N. Gregory Mankiw mentioned in a topic “How People Make Decisions” that people face trade-offs, comparing the costs and benefits, think at the margin and respond to incentive.8 Thus, it is understood that the small

business owner’s decision to exit the market is an economic decision.
As we know that the purpose of someone to run a business is to acquire and maximize profits.

When the price of rent rises, which is a fixed costs of production, it will reduce profits. Furthermore, the business owner will consider whether it is still in the desired profit level. He will calculate the total revenue and total cost of his business. If the total revenue it would get less than its total costs, he would decide to exit the market. The same calculation is done by the company that will enter into the market. Given that the new community is formed lucrative target market for them, thus they decided to enter into the

market.
For the small business owner who owns the land and buildings, they also face the fact that their target market has changed. And that he struggled in adjusting to changes in the new neighborhood. On the other hand, he has the opportunity to earn huge amounts of money by selling assets.
Facing the fact that the business cannot survive in the new neighborhood, in my opinion, it is the best and the most sense to do, that is, exit the market, sell his assets and start a business in another place that is more affordable and profitable after conducting a thorough calculation by taking into account the costs and benefits.