Thursday, February 28, 2008

Pg. 99: Joel Waldfogel's "The Tyranny of the Market"

The current feature at the Page 99 Test: Joel Waldfogel's The Tyranny of the Market: Why You Can't Always Get What You Want.

About the book, from the publisher:
Economists have long counseled reliance on markets rather than on government to decide a wide range of questions, in part because allocation through voting can give rise to a "tyranny of the majority." Markets, by contrast, are believed to make products available to suit any individual, regardless of what others want. But the argument is not generally correct. In markets, you can't always get what you want. This book explores why this is so and its consequences for consumers with atypical preferences.

When fixed costs are substantial, markets provide only products desired by large concentrations of people. As a result, people are better off in their capacity as consumers when more fellow consumers share their product preferences. Small groups of consumers with less prevalent tastes, such as blacks, Hispanics, people with rare diseases, and people living in remote areas, find less satisfaction in markets. In some cases, an actual tyranny of the majority occurs in product markets. A single product can suit one group or another. If one group is larger, the product is targeted to the larger group, making them better off and others worse off.

The book illustrates these phenomena with evidence from a variety of industries such as restaurants, air travel, pharmaceuticals, and the media, including radio broadcasting, newspapers, television, bookstores, libraries, and the Internet.
Among the praise for The Tyranny of the Market:
"Joel Waldfogel takes up the mythology of the market responding to our wants and desires, and shows how it often leaves out many people who are unable to get very much of what they want...This book could be very persuasive to those who will not listen to voices that have an explicitly progressive agenda."

"This is a book for all the people out there who sit down and flip through hundreds of channels but never seem to find something they like. In it Joel Waldfogel, one of America's most interesting economists, shows exactly how many people in the marketplace end up stranded, unable to get what they want. It's a provocative statement on why free markets don't necessarily make everyone better off."
--Austan Goolsbee, The University of Chicago Graduate School of Business

"The Tyranny of the Market conveys an exciting debate focusing on whether 'the market gets it right,' allowing each type of consumer to achieve his own goals through participating in markets. An important book."
--Matthew Kahn, University of California, Los Angeles

"The Tyranny of the Market presents a fascinating account of why the market fails to satisfy preference minorities."
--Fiona Scott Morton, Yale School of Management
Get a taste of Waldfogel's argument in this article he wrote for Slate.

Read an excerpt from The Tyranny of the Market and learn more about the book at the Harvard University Press website.

Visit Joel Waldfogel's personal website and his faculty webpage.

Joel Waldfogel is Chair and Ehrenkranz Family Professor of Business and Public Policy at The Wharton School of the University of Pennsylvania.

The Page 99 Test: The Tyranny of the Market.

--Marshal Zeringue