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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, modern 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 compete for the same limited number of travelers, ticket prices fall, profits disappear, and eventually one airline leaves the market.
Competition occurred exactly as economists hoped. Only one competitor survived.
The Price War Nobody Wins
One of the clearest examples is the price war.
Imagine two grocery stores standing across the street from one another. One lowers prices by five percent. The other responds with seven percent. The first cuts again. Customers celebrate. Shareholders do not. Both companies are selling roughly the same groceries while earning much smaller profits. Eventually someone runs out of money.
This pattern has repeated across industries—from retail and airlines to food delivery, ride-sharing, telecommunications, and online marketplaces.
Ironically, the winner is often not the company with the best product. It's the company with the deepest pockets.
Why Companies Buy Their Rivals
People often assume mergers happen because large corporations simply enjoy becoming larger.
Sometimes. More often, mergers happen because maintaining two nearly identical competitors becomes economically inefficient.
Imagine two streaming platforms spending billions every year licensing similar movies, developing similar technology, advertising to the same customers, and fighting over the same subscriptions.
Instead of continuing an expensive battle, combining into one company can reduce enormous costs. One engineering team. One marketing department. One headquarters. Bolivar suddenly carries less weight.
Governments Ride the Same Horse
The phrase also describes government budgets remarkably well.
Every government would like to spend more. Better infrastructure. Better healthcare. Lower taxes. Higher pensions. More defense. More education.
The problem is simple. Tax revenue has limits. Borrowing has limits. Political support has limits. Every dollar spent in one place cannot be spent somewhere else.
Economists call this
opportunity cost. Politicians call it budgeting.
Central Banks Face Their Own Trade-Offs
Central banks constantly balance competing objectives. They want inflation to remain low. They also want unemployment to remain low.
Sometimes those goals reinforce one another. Sometimes they collide. Lower interest rates encourage borrowing, investment, and hiring. They can also fuel inflation. Higher interest rates reduce inflation. They may also slow economic growth.
No central banker enjoys disappointing part of the economy. Yet difficult trade-offs are unavoidable. Even monetary policy has a weight limit.
Investors Learn This Lesson Again and Again
Every exciting new industry attracts investors.
Artificial intelligence. Electric vehicles. Cryptocurrency. Clean energy.
History, however, tells a consistent story. Most industries do not produce dozens of long-term winners.
During the early twentieth century, North America had hundreds of automobile manufacturers. Today only a handful remain.
The internet boom created thousands of companies. Only relatively few became global giants.
The market grew enormously. Individual competitors still disappeared.
Growth does not eliminate competition. It simply changes the odds.
But Sometimes Bolivar Gets Stronger
Fortunately, not every market is fixed. Some industries expand so rapidly that they create room for many successful companies.
Cloud computing is one example. Instead of replacing one dominant technology company with another, it created opportunities for multiple global leaders.
Artificial intelligence may be following a similar path. Demand continues to expand. Entirely new products appear every month. Businesses discover uses they never imagined.
In these situations, the horse becomes stronger because the market itself becomes larger.
The number of riders hasn't changed. The capacity has.
The Question Every Business Should Ask
Entrepreneurs often ask:
"Can I build a better product?"
That is an important question. A better one might be:
"Is there enough market for another successful company?"
Sometimes the answer is yes. Sometimes the answer is not yet. Sometimes the answer was yes five years ago—but no longer.
Understanding market capacity may be just as valuable as understanding customers.
Economics Is the Science of Limits
People often think economics is mostly about complicated equations, charts, and forecasts.
In reality, many economic ideas begin with a surprisingly simple observation.
Resources are limited. Choices have consequences. Trade-offs are unavoidable.
That is why
"Bolivar can't carry double" has survived for more than a century. It captures one of economics' oldest truths in a single memorable image. Every business has limits. Every government has limits. Every investor has limits. Even every household budget has limits.
The real challenge is not discovering where those limits exist. The real challenge is learning how to expand them. Technology expands them. Innovation expands them. Productivity expands them. International trade expands them. Entrepreneurship expands them.
The world's most successful economies are rarely the ones that spend all their energy fighting over the horse. They are the ones that build a stronger horse.
And perhaps that is the most valuable economic lesson hidden inside an old O. Henry story.
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